Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — EDUCATION AND SCIENCE

Secondary Education

Mr. Campbell-Savours: asked the Secretary of State for Education and Science whether he will review the progress of secondary education reorganisation.

The Secretary of State for Education and Science (Sir Keith Joseph): Local education authorities are on target to remove 1 million surplus school places by 1986. When I consult their associations to set targets for 1987 and later, I shall stress the need to review progress in reorganising secondary schools where the decline in pupil numbers will be at its sharpest for the rest of the decade.

Mr. Campbell-Savours: Is the right hon. Gentleman aware that just as a backlog of building repairs and maintenance for hospital buildings can damage health care, so, with needy education expenditure, a backlog of maintenance, repairs and modifications, particularly where reorganisation of secondary education is taking place, can damage educational provision? Is he further aware that people are willing to pay higher taxes to ensure that such modifications take place and that — for example, in my constituency—without them secondary reorganisation will be threatened?

Sir Keith Joseph: The Government always respect the need for capital to implement approved school reorganisations, as occurred in Cumbria this year. Backlog in maintenance has been going on under one Government after another for many years.

Mrs. Kellett-Bowman: Will my right hon. Friend accept my thanks and those of many people in Lancaster for preserving the girls' grammar school, for enabling it to work on harmoniously in its present buildings and for preventing chaos and disruption at Greaves and Castle schools?

Sir Keith Joseph: The Government try to take decisions that are in the best interests of the children. I am grateful to my hon. Friend for those remarks.

Mr. Freud: Will the Secretary of State give an assurance that no reorganisation will be undertaken if it gives a higher priority to the selected sector than to the benefit of all children?

Sir Keith Joseph: The record shows that we try to make decisions which are in the interests of all the children

concerned. I do not use strong language frequently, but it was absolutely wicked of the Labour party, when in government, to abolish direct grant schools.

Student Grants

Mr. David Atkinson: asked the Secretary of State for Education and Science when he expects to complete his review of student grants.

Mr. Stern: asked the Secretary of State for Education and Science when he expects to publish a consultation document on the future funding of higher education by parents and students.

The Parliamentary Under-Secretary of State for Education and Science (Mr. Peter Brooke): As my right hon. Friend announced on 24 January 1985, a consultative paper will be issued as soon as practicable. After an appropriate period of consultation, the Government will decide on any changes which they may wish to introduce and will publish proposals accordingly.

Mr. Atkinson: Will my hon. Friend, in his review, investigate what savings can be made, perhaps by computerisation, to reduce the current bureaucratic duplication of the administration of student grants that goes on both by the university departments concerned and by education authorities?

Mr. Brooke: Local education authorities administer the system effectively. We shall have to consider the administrative implications of any changes in the awards system arising out of the review.

Mr. Fatchett: What steps is the Minister taking to ensure that the widespread anxieties that are felt about the real level of student grants and about the Government's possible intention to move to a student loans system will be taken into account, and that a future system will ensure that children from low income families have a right of access to higher education?

Mr. Brooke: My right hon. Friend has always made it clear that the review will take into account the interests of both the taxpayer and parents. I am always slightly puzzled by remarks from Opposition Members about low income families, in view of the fact that they bequeathed to us a parental contribution scale that was regressive in its effect.

Mr. Stern: In his review, will my hon. Friend take into account the strong desire of parents, students and, as expressed this week, the Association of University Teachers for an expansion of higher education? Does he agree that the only way to achieve that is to find a fresh source of funding which does not involve either the taxpayer or a forced levy on parents?

Mr. Brooke: I am grateful to my hon. Friend for opening up the possibilities of the review. The review will cover all possibilities.

Mr. Wilson: If it proves impossible for the Under-Secretary of State to complete the review before the next academic session, and bearing in mind that, in real terms, the grant has fallen over five successive years, will he undertake to give a top-up to the proposed grant for 1985–86 so that students are not placed in a position of virtual poverty?

Mr. Brooke: My right hon. Friend the Secretary of State has already announced the grant levels for 1985–86. We shall have to see how we get along in terms of the timing of the consultation.

Mr. Rhodes James: Will my hon. Friend, who has many friends on both sides of the House, look especially in his review at the problem of discretionary grants and the inequities between one county and another?

Mr. Brooke: I cannot give my hon. Friend a commitment that the review will be that wide. I understand his interest in the matter.

Mr. Andrew F. Bennett: Does the hon. Gentleman accept that this review is a sham because all the money will be pre-empted today in the Budget? Does he accept that what is really needed is more money for student grants in order to give students a decent basic income? If the hon. Gentleman cannot find that much money, will he at least return student grants to their 1979 real value?

Mr. Brooke: The hon. Gentleman knows that £600 million is spent on student support at the present time. That is the most generous level of support in any Western country.

Mr. Heathcoat-Amory: Will my hon. Friend affirm the general principle that, where possible, students should be funded by their parents and not by other people's parents in the form of the general taxpayer?

Mr. Brooke: The consultative paper will not prejudge any particular method of student support. Parental contributions may well continue to have a role to play in student support in the future.

Teachers (Pay)

Mr. Meadowcroft: asked the Secretary of State for Education and Science what representations he has received as to comparability of teachers' pay with other groups.

Sir Keith Joseph: Comparability with the pay of other groups is a recurring theme in representations to me by teachers about their pay. The prime factors in settling pay are the employers' capacity to pay and their need to recruit and retain teachers of appropriate quality.

Mr. Meadowcroft: Is the Secretary of State aware that the report of the Burnham committee's pay data working group shows that, over 10 years, the pay of teachers compares unfavourably with that of many other groups in the public sector? Surely comparability is important, because it gives some idea of the Government's perception of the importance of the teaching profession.

Sir Keith Joseph: I disagree with the hon. Gentleman. Chasing past relativities means a return to a self-defeating inflationary spiral, which would price even more people into unemployment.

Mr. Madel: As the unions involved in the current dispute are due at ACAS tomorrow, should not classroom disruption end at once to give ACAS a reasonable chance of solving the dispute?

Sir Keith Joseph: I cannot believe that classroom disruption is in the interests of teachers themselves, let alone of children. I hope that they will give up disruption.

Mr. Flannery: Is it not a fact that teachers' pay—[HON. MEMBERS: "No."] Perhaps hon. Members will listen.
Is it not a fact that teachers' pay has fallen a long way behind the pay of other people? Is it not disgraceful that a teacher, who has taken A-levels and undertaken four years of training, should earn less when he or she begins to teach than an ill-qualified young policeman with only three months training? Has that not driven teachers to industrial action which, without the type of provocation in which the Secretary of State has engaged, would never have needed to be taken?

Sir Keith Joseph: I do not for a moment denigrate the hard work, the difficult job and the devotion to duty of most of the teachers, but they should bear in mind that they have one of the most secure jobs in the country, that they are important and that they have been offered, and have refused, a 4 per cent. pay increase and all arbitration measures. They have refused even to discuss proposals for appraisal. I cannot believe that that is in their interests.

Mr. Key: Does my right hon. Friend agree that the National Union of Teachers is seeking to prove that might is right because it is the biggest teaching union, that it has divided the teaching unions, and that the other teaching unions disagree with it fundamentally and are prepared to conciliate, arbitrate and negotiate to solve the problem? [Interruption.]

Sir Keith Joseph: It is no good Opposition Members jeering at my hon. Friend. The teaching unions seem to be split.

Mr. Boyes: Is it not a fact that local government officers have had a much greater pay rise than teachers during the 10 years between 1974 and 1984? I welcome the rise in pay for officers in local authorities, but is it not a fact that those delivering the service and teaching in the classrooms should have had at least as big a rise as administrators in the service? Is that not a reason why teaching morale is as low as it has ever been? Is it not also a fact that teachers' resources have been continuously cut and that our most precious asset, children's education, is suffering as a consequence?

Sir Keith Joseph: I do not think that that justifies the return to a particular year, which the teachers' union leaders advocate, as every other group would seek the same argument of comparability, which would start another inflationary spiral, with even more unemployment.

Mr. Colvin: Will my right hon. Friend acknowledge that there are not enough policemen, yet there are too many teachers?

Sir Keith Joseph: My hon. Friend is surely right that the pay rise for the police was necessary to staunch an extremely sharp outflow of policemen at the time. I do not accept that there are inherently too many teachers, although the House knows that, because of the fall in the number of school children, a small decrease is being brought about in the teaching force.

Mr. Radice: Will the Secretary of State tell the House and parents what he is doing to help solve the dispute?

Sir Keith Joseph: The function of the holder of my office is to play a certain part in the negotiations, which are primarily between the employers and the teachers.

Mr. Tracey: Can my right hon. Friend say how many representations in favour of the teachers' pay claim he has received from parents and taxpayers because, if my constituency is anything to go by, it will be few?

Sir Keith Joseph: A significant minority of the representations reaching us from parents are in favour of the teachers; but I suspect that the purpose of the teachers in disrupting children's education is not calculated to win the esteem of most parents.

Education Meals Service

Mr. Eastham: asked the Secretary of State for Education and Science if he will make a statement on the education meals service.

The Parliamentary Under-Secretary of State for Education and Science (Mr. Bob Dunn): The school meals service is the responsibility of the local education authorities. A number of individual authorities have made substantial net savings in expenditure in this area since 1979–80, and the Government expect others to do the same.

Mr. Eastham: Is the Parliamentary Under-Secretary of State aware that when the Government issue circulars, especially about the privatisation of school meals, there is no reference to the supervision of school meals, which forms a considerable part of the school meals' costings? In the city of Manchester, for example, the supervision of school meals costs £750,000. Will the Minister ensure that if authorities privatise school meals the cost of supervision is included?

Mr. Dunn: I understand the hon. Gentleman's point, but I believe that, far too few local education authorities are embarking on the privatisation of the school meals service. If they did, a great deal of money could be saved and spent in other areas of the education service.

Sir Geoffrey Finsberg: Does my hon. Friend agree that, apart from the possibility of privatisation, authorities, such as the Inner London education authority, could raise a substantial sum merely by keeping their school meals' prices in line with the cost of living?

Mr. Dunn: My hon. Friend is entirely right. He knows, and the House must know, that ILEA has not increased school meals charges since 1979. In that sense, a great deal of Londoners' money is being spent unnecessarily on the school meals service, instead of being a saving for ratepayers.

Teachers (Pay)

Mr. Heddle: asked the Secretary of State for Education and Science when he next plans to meet representatives of the Professional Association of Teachers to discuss the current pay claim.

Sir Keith Joseph: I have no current plans to do so, but I meet representatives of the Professional Association of Teachers fairly frequently and I know their position.

Mr. Heddle: Does my right hon. Friend applaud members of the Professional Association of Teachers and others who, through moderation, conscience and conviction, are continuing to set a standard of dedication to our schoolchildren? Is not the answer to settling the

teachers' pay dispute for them to adopt the new assessment procedures already adopted and approved by the local education authorities?

Sir Keith Joseph: I agree with my hon. Friend in applauding those teachers, whether members of the PAT or not, who stick to serving the children, as is their professional duty.

Mr. Spearing: Does the Secretary of State agree that on Sunday, in a public statement on the pay dispute, he made it clear that in his opinion only a minority of teachers were unsatisfactory? Would it not be more appropriate, in the second half of the 20th century, to provide all teachers with the support to make them better teachers, without arbitrary and impossible forms of assessment? Would not that approach get the agreement not only of the PAT but of all teachers in the profession?

Sir Keith Joseph: An appraisal system for all teachers is very much in their interests. It will permit the career development of every teacher. After all, appraisal is now going on informally. All that I am seeking is that it should be done formally for the benefit of all teachers.

Mr. Greenway: Is it not sad that some teachers, who are not members of the PAT, have got themselves into a cycle of striking and refusing to teach examination pupils, mark books, and so on, thereby increasing classroom difficulties, which makes them suffer from extra stress when they return to the job?

Sir Keith Joseph: I agree with my hon. Friend.

Mr. Radice: May I remind the Secretary of State that he is actually responsible for running education in this country? [Interruption.] Hon. Members should read the Education Act 1944. The right hon. Gentleman therefore has a duty to answer the question that I asked earlier: what is he doing to help solve the teachers' dispute?

Sir Keith Joseph: The hon. Gentleman knows that we have a decentralised system of education in this country and that I have certain statutory duties, but he also knows that both the employers and the teachers' representatives are today, and I believe tomorrow, having a meeting with the Advisory, Conciliation and Arbitration Service.

Student Grants

Mr. Canavan: asked the Secretary of State for Education and Science what is the purchasing power of (a) the minimum and (b) the maximum student grant expressed as a percentage of the value in May 1979.

Mr. Brooke: The purchasing power of the minimum and the maximum student grant for 1984–85, expressed as a percentage of the value in September 1978, is 58 per cent. and 91 per cent., respectively. Grants are paid from September, and it is appropriate to apply the corresponding price indices.

Mr. Canavan: Is the Minister aware that the Government's last reported climbdown on the student grants issue was of benefit to only a minority of better-off parents, and that students in general have suffered a vicious attack on their living standards since the Tory Government came to power in 1979? Is it not about time that the purchasing power of the student grant was restored and parental contributions phased out completely so that students can study in peace instead of having to worry about poverty and financial hardship?

Mr. Brooke: It is because the issue of student grants attracted the attention that it did in November and December that my right hon. Friend the Secretary of State announced the review that is taking place this year.

Mr. Robert B. Jones: Why should an apprentice bricklayer in my constituency pay tax to support grants for people who are better off than he is?

Mr. Brooke: There are many who share my hon. Friend's view. It also underlies the review.

School Meals (Nutritional Standards)

Mr. Fatchett: asked the Secretary of State for Education and Science if he will introduce legislation to lay down minimum nutritional standards for the provision of school meals.

Mr. Dunn: No, Sir.

Mr. Fatchett: I am grateful to the Minister for that detailed reply. Does he not recognise that in many parts of the country, particularly those areas under Conservative control, there has been a fall in nutritional standards? Does he not also recognise the impact of that, particularly on low-income families? Should not a Government who claim to be a caring Government do something about it and make sure that children from low-income families have a proper and decent meal as part of their daily diet?

Mr. Dunn: I challenge the hon. Gentleman to prove the first part of the allegation contained in his question. The law makes it quite clear that children from families which are in receipt of supplementary benefit or family income supplement should receive free meals at school. I remind him and the House that the responsibility for a balanced diet for children rests with parents. It is parents, not the state, who bear children.

Mrs. Rumbold: Does my hon. Friend agree that it is more important to encourage local authorities to undertake the private sector provision of meals in schools, as my authority in Merton has done, than to hound local authorities by asking them to do things that are rightly the responsibility of parents?

Mr. Dunn: My hon. Friend makes a fair and correct distinction between those essential elements of the education service which are concerned with education and those which are not. Making savings on school meals does not bring about the provision of junk food. It can mean savings on expenditure, which can go elsewhere in the education service to bring about better results and standards in the schools.

Mr. Tony Lloyd: Is it not staggering that the Minister should ask my hon. Friend the Member for Leeds, Central (Mr. Fatchett) to prove whether school meals are good or bad? Should not the Minister be able to say to the House that he knows? That is his responsibility as a Minister charged with responsibility for the schools system.

Mr. Dunn: I challenged the hon. Member for Leeds, Central (Mr. Fatchett) to prove the allegation that he made. If he can do so, I am prepared to sit down and talk to him. If he cannot, it is up to him to apologise to me and to the House.

Mr. Adley: Is not nutrition related to content? Can my hon. Friend explain why we spend so much time and

trouble warning people about the dangers of cigarettes, but seemingly spend no time at all warning them about the dangers of either alcohol or foods which can induce heart disease? Will he consider the problem seriously, in consultation with his ministerial colleagues, and ensure that the branding of foods is undertaken?

Mr. Dunn: I understand the point my hon. Friend is making. I am aware of the concern felt by many about the link between diet and disease. The Department of Health and Social Security has commissioned a survey of the diet of schoolchildren. It is hoped that the results will be published in the very near future. I shall take on board the points made by my hon. Friend.

Mrs. Clwyd: Why do the Government continue to provide a subsidy for full fat milk, but no subsidy for skimmed milk, which nutritionists say is better for all of us?

Mr. Dunn: The hon. Lady may be right; she may be wrong. I do not know.

Open University

Mr. Andrew F. Bennett: asked the Secretary of State for Education and Science if he will make a statement about the future of the Open University.

Sir Keith Joseph: The Open University will continue to play an important part in the Government's programme for higher education by providing degree level education for those who missed the opportunity earlier in life and through continuing education relevant to the updating needs of industry, commerce, the professions and public services.

Mr. Bennett: Does the Secretary of State accept that the visiting committee totally repudiated his view of the Open University and that it set out clearly that the Open University is doing an excellent job? Would it not be fair for the Secretary of State to say to the House that he has got over his prejudice against the Open University and will give it money so that it may continue to do a first-class job?

Sir Keith Joseph: No, Sir. The Government value the Open University and the work that it does, but they believe that, like other institutions, it has to seek to cover its costs by economies, where possible.

Mr. Alexander: Bearing in mind the value of the new technology courses of the Open University in broadening the skills of our work force, what reassurance can my right hon. Friend give that those courses will be continued, despite the drop in income?

Sir Keith Joseph: The Government have used taxpayers' funds to meet some of the needs of the Open University in the light of the visiting committee's report. But the visiting committee thought that there was scope for the Open University to make some economies, and it was disappointed that the Open University did not have the management figures to enable it to consider the economies that it might make.

Mr. Donald Stewart: The cut in funds to other universities, though deplorable, is understandable in view of the policy of the Government, but why do students of the Open University, who appear to meet the criterion of


Conservative philosophy because they are doing their own independent study without the use of buildings, and so on, not receive assistance from his Department?

Sir Keith Joseph: They do. Open University students, whose initiative and enterprise the Government admire, meet only 14 per cent. of the costs of their studies, or 19 per cent. if one includes summer school fees. The taxpayer bears 86 and 81 per cent. respectively.

Mr. Sumberg: Is my right hon. Friend aware that the Open University is one of the most cost-effective centres of higher education? Is that not a reason why we should give it more rather than less support?

Sir Keith Joseph: I grant that it is cost-effective on one form of reckoning. On another form of reckoning it has about the same public cost significance as other such institutions.

Mr. Fisher: Does the Secretary of State recognise the importance of the Open University to unemployed students? Will he undertake to protect the unemployed students' fund in the Open University, to ensure that that part of its work is increased rather than decreased?

Sir Keith Joseph: Yes, Mr. Speaker. That is why the fund for the unemployed in the Open University budget has been protected.

Mr. Hannam: Is my right hon. Friend aware that the Open University offers special opportunities to disabled people, who cannot gain access to other university campuses? Will he therefore ensure that the number of disabled places is maintained in any future reorganisation?

Sir Keith Joseph: Yes. The visiting committee took special care about that.

Mr. Freud: Will the Secretary of State reconsider the visiting committee's report and try to meet its demands a little more closely?

Sir Keith Joseph: The Government have met £4 million of the visiting committee's proposed suggestions and are considering a number of others.

Student Unions (Expenditure)

Mr. Latham: asked the Secretary of State for Education and Science what progress has been made with his discussions about the controls which are available over expenditure of public money by student unions.

Mr. Brooke: Discussions are proceeding between officials of the Department and representatives of higher education interests. These are preliminary discussions intended to inform the Government as a basis for decision upon appropriate next action. The Government will make a statement in due course.

Mr. Latham: Is it not deplorable that Jewish students at Sunderland polytechnic have been denied the right to a Jewish society of their choice? Surely Jewish taxpayers should not have to pay for a union which operates such blatant discrimination.

Mr. Brooke: I share my hon. Friend's vivid anxiety that the principles of freedom of speech and association should be maintained, especially in places of higher education. I understand that the authorities at Sunderland polytechnic are actively examining the issues raised by the

student union's refusal to ratify the constitution of the proposed Jewish society, and that the matter will be considered by the polytechnic governors at their next meeting. My right hon. Friend is minded to make inquiries of the authority and the director if second thoughts do not prevail.

Mr. Janner: May I thank the Minister for that reply? Has he considered whether the Sunderland students' action is in breach of the Race Relations Act 1976 and whether it should be referred to the Commission for Racial Equality by the Government, as it has been by the Jewish community in this country?

Mr. Brooke: I have noted what the hon. and learned Gentleman said. He will also be aware that the National Union of Students has taken up with the student union at the polytechnic the inappropriateness of what it is doing.

Mr. Peter Bruinvels: Does my hon. Friend agree that student unions are abusing their role and spending far too much money subsidising trips for students to miners' picket lines—when they existed—to anti-Government meetings in London and all that sort of thing? Is it not time to calm them down once and for all?

Mr. Brooke: Limitations on the use of student union funds are set by charity law. That was made clear by my right hon. and learned Friend the Attorney-General in the guidance issued to institutions in 1983. Expenditure must further the interests of students as students.

Mr. Sheerman: While the Minister is being urged by his colleagues to introduce a final solution to this matter will he try to remember that this is the International, Year of Youth, whose aims are peace, participation and development? Participation—growing up and learning about democracy—is an important part of a student's development. Would it not be more sensible for the Government, when they are investigating and discussing, to discuss matters with the National Union of Students, which represents the students of this country, and which has not been approached by the Minister? Could he not talk to it and get that democracy moving?

Mr. Brooke: I applaud International Youth Year, of which the hon. Gentleman reminds me each month. I hestitate to say to him that it is arguable that voluntary participation is sometimes preferable to participation in which there is a greater degree of coercion.

Mr. Leigh: Have the Government given consideration to making universities, rather than student unions, responsible for the funding of recreational activity by students, thus enabling us to have voluntary rather than compulsory membership of student unions and achieving a considerable saving of public money?

Mr. Brooke: The matter is obviously one for the universities. In some universities that provision is rendered by the universities.

Mature Students

Mr. Wallace: asked the Secretary of State for Education and Science how many mature students entered further and higher education in 1982, 1983 and 1984, respectively.

Mr. Brooke: In 1982 and 1983, 37,400 and 39,000 home students aged 21 and over entered a course of full-time higher education in Great Britain for the first time. Figures for 1984 and directly comparable figures for non-advanced further education are not available.

Mr. Wallace: Does the Minister accept that if economic revival is to become a reality in the country it is necessary to have as much retraining and as many opportunities for developing the skill resources of the population as possible? What part does he envisage further and higher education playing in this, and what steps is he taking to encourage mature entrants?

Mr. Brooke: The Department of Education and Science is participating in the adult training strategy, which was launched in collaboration with the Department of Employment. The projections for mature students in higher education show a continuing increase on the projections which we published last year.

Mr. Sheerman: Will the Minister take on board the recommendations in the report of the Association of University Teachers published this week entitled "Expansion, Expansion, Expansion"? In terms of the House of Lords Select Committee report on the shortage of high tech qualified people, whom we need, and in terms of reports from Government Ministers about the appalling lack of high tech graduates, would not adult students be attracted into this kind of course, and is this not where it is vital to have the expansion about which the AUT speaks?

Mr. Brooke: The AUT has been good enough to send me a copy of its booklet, so I have had an opportunity to read it. The hon. Gentleman will know that in the booklet the AUT is arguing for an expansion in all subjects, and not simply in high tech.

Secondary Schools (Reorganisation)

Mr. Loyden: asked the Secretary of State for Education and Science what representations have been made about secondary schools reorganisation by parents organisations.

Mr. Dunn: Such representations are received, in the form of statutory objections and deputations to the Department, in respect of most proposals to reorganise secondary education. The views so expressed are one of the factors that my right hon. Friend takes into account when deciding these proposals.

Mr. Loyden: Now that the Secretary of State has exercised his power to keep open Bluecoat school, will he also exercise his power to ensure that the necessary finance, assessed at some £3 million, is available to the local education authority to enable it to carry out the wishes of the Secretary of State?

Mr. Dunn: A letter along those lines has been sent to the Department of Education and Science by the chairman of the education committee. That letter is being considered.

Mr. Mark Carlisle: Does my hon. Friend agree that his right hon. Friend's welcome decision about Bluecoat school as a school of high excellence shows that the Government listen to parental views on these matters?

Mr. Dunn: My right hon. and learned Friend is right. When my right hon. Friend considers proposals on their

individual merits, he must take into account not only the views of the parents but the proposers' case for the proposals and all other relevant circumstances, including his own policies.

Mr. Alton: While I welcome the decision to keep open Bluecoat school in my constituency, will the Minister now reconsider the decision to close state schools which are scheduled for closure this year in Liverpool? Will he accept that, when decisions of this kind are being made, it would be an improvement if the Ministers concerned could visit the schools affected by closure proposals?

Mr. Dunn: To take the latter point first, if I were to visit all the schools under consideration for closure by the Department I would spend no time in the House of Commons or at home in my constituency. Additionally, it is not possible for the Secretary of State to change an earlier decision. Those decisions are now legally binding on the local education authority unless fresh proposals are made by the local education authority itself.

Mr. Batiste: Can my hon. Friend assure parents in Leeds that he will give full weight to their representations opposing the closure of sixth forms in that city on grounds of viable numbers and proven worth?

Mr. Dunn: On behalf of my right hon. Friend, I shall be happy to consider all the views and points put to us on any proposals in any part of the land.

Polytechnics (Degree Courses)

Mr. Madel: asked the Secretary of State for Education and Science whether he expects the proposed new centralised student admissions scheme for degree courses in polytechnics to be in operation for the academic year 1986–87; and if he will make a statement.

Mr. Brooke: I understand that the new polytechnic central admissions system is already in operation in respect of the admission of students to full-time and sandwich courses at degree level for the academic year 1986–87.

Mr. Madel: The new system will help both polytechnics and students. Can my hon. Friend confirm that the Government welcome the increase in numbers attending polytechnics for degree courses, which is of benefit not only to industry and commerce but to the individuals concerned?

Mr. Brooke: I am delighted to give the welcome for which my hon. Friend asks.

Centre Européen Recherche Nucleaire

Mr. Dalyell: asked the Secretary of State for Education and Science if he will make a statement on the future of the British subscription to the Centre Européen Recherche Nucleaire (CERN).

Mr. Brooke: Last March my right hon. Friend announced the formation of a review group, chaired by Sir John Kendrew, to examine the whole question of British participation in particle physics research, including our membership of CERN. I understand that the group will report to the chairmen of the Science and Engineering Research Council and the advisory board for the research councils in May, and when we have considered their advice my right hon. Friend will be able to make a statement. Meanwhile, the United Kingdom continues to participate fully in CERN.

Mr. Dalyell: Would it not be humiliating throughout the international scientific community if this country were to fail to cover its subscription to CERN?

Mr. Brooke: The purpose of the review is to examine the matter that I have described. We shall go through the whole process of receiving the report—[Interruption]—and determine our conclusions on the advice received.

Mr. Speaker: Order. I ask the hon. Members to refrain from chatting.

Teachers (Pay)

Mr. Patrick Thompson: asked the Secretary of State for Education and Science if he will make a statement on the progress made towards settling the teachers' pay dispute.

Sir Keith Joseph: Following the teachers' rejection of management's offer of 4 per cent. and their refusal of arbitration, the management panel has invited the teachers to agree to conciliation. ACAS has offered its services. It today opens exploratory discussions with the management panel and has invited the teachers' panel to similar, separate discussions:

Mr. Thompson: Does my right hon. Friend agree that the present confrontation in our schools is harming our children's education for the second year running, and will harm it further if it continues into the examination period? Does my right hon. Friend further agree that the teachers' leaders would be well advised to encourage their members to go back into the classrooms and to return to the negotiating table so that talks can proceed?

Sir Keith Joseph: I answer yes to both of my hon. Friends questions.

Campaign for the Advancement of State Education

Mr. Allen McKay: asked the Secretary of State for Education and Science when he last met representatives of the Campaign for the Advancement of State Education; and what he discussed with them.

Mr. Jim Callaghan: asked the Secretary of State for Education and Science when he last met representatives of the Campaign for the Advancement of State Education to discuss standards in education.

Sir Keith Joseph: I have not yet met representatives of CASE, but shall be doing so on 1 April, principally to discuss the resolutions from their last annual conference.

Mr. McKay: When the right hon. Gentleman meets that organisation, will he discuss the lowering of morale of teachers and pupils due to his intransigence? Why does he think that people should go to arbitration when he refuses to fund any increase and when local authorities cannot afford to do so because of rate capping?

Sir Keith Joseph: I am glad that the hon. Gentleman accepts that what local authorities can afford is a key issue. I expect that the people coming to see me will raise some such question.

Mr. Jim Callaghan: The future of education is dependent on high morale among the teaching staff. In view of the current low morale, what will the right hon. Gentleman do about increasing teachers' pay?

Sir Keith Joseph: I have offered the interest of myself and the Government in the introduction of an appraisal system that might offer teachers the possibility of better career earnings for effectiveness.

Government Purchasing

Mr. Thurnham: asked the Secretary of State for Education and Science what measures he proposes following the conclusions of the recent report by the Management and Personnel Office on Government purchasing.

Sir Keith Joseph: Officials of the Department are preparing an action document on the conclusions of the report. The document will shortly be submitted for my approval.

Mr. Thurnham: Will my right hon. Friend do all in his power to simplify Government purchasing procedures so that small firms can play their part in achieving the potential savings of £400 million a year?

Sir Keith Joseph: Although the Department is a relatively small public purchaser we shall certainly, on the basis of the report, do our best to ensure clear responsibilities and efficient procedures for purchasing and obtaining better value for money.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Stanbrook: asked the Prime Minister if she will list her official engagements for Tuesday 19 March.

The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in this House I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty the Queen.

Mr. Stanbrook: At a time when we, the people of a comparatively wealthy and successful country, are about to consider the distribution of our wealth, would it not be right to remember how lucky we are compared with the thousands of people dying from starvation in Africa—a continent in which Britain has hitherto made an immense contribution to human progress? Will my right hon. Friend confirm that Britain will play a leading role in the international campaign to find long-term solutions to the problem of famine in Africa?

The Prime Minister: Yes, Mr. Speaker. At the United Nations conference last week on the emergency in Africa my right hon. Friend the Minister for Overseas Development stressed the need to sort out the underlying difficulties of some of the problematic countries in Africa, and pledged £125 million in development aid to 20 of the worst affected countries in Africa. That is in addition to the £60 million in emergency aid, and covers the coming financial year. On a longer term basis, my right hon. Friend has pledged £75 million to the World Bank special facility for Africa. We are well aware of the problem that my hon. Friend has highlighted.

Mr. Beith: Does the Prime Minister share the view of The Times that the Foreign Secretary's speech on the


American star wars programme was muddled, mealy-mouthed and damaging to the Alliance? [Interruption.] Does the right hon. Lady believe that that statement represented a realistic assessment of the dangers of the star wars strategy?

The Prime Minister: I reject the language and the conclusion in the first part of the hon. Gentleman's question. The policy was, and remains, in the four points set out at Camp David and reaffirmed when I was in Washington. My right hon. and learned Friend the Foreign Secretary was speaking in pursuance of that policy.

Mr. Hayes: Is my right hon. Friend not greatly encouraged by the Manpower Services Commission's quarterly review, published today, which shows that 10 per cent. of the work force are now self-employed? Will that news encourage my right hon. Friend to make the very successful enterprise allowance demand-led?

The Prime Minister: I noticed the report and the increasing numbers of people who are self-employed. That augurs well for the future of small businesses, as the self-employed gradually come to employ other people. I am afraid that for the answers that he sought in the last part of his question my hon. Friend must await the statement of my right hon. Friend the Chancellor of the Exchequer.

Mr. Kinnock: The four points agreed with President Reagan are rather vague in several respects. For instance, can the Prime Minister tell us what veto she has that will ensure there will be no step from research into development, with all the consequent experiments, without her permission and the permission of the House?

The Prime Minister: It is not a question of a veto. Research is permitted, and the constraints on deployment are those contained in the anti-ballistic missile treaty, signed in 1972 by both the Soviet Union and the United States, which fully permits research, but requires negotiation before testing and deployment, in accordance with the terms of the treaty.

Mr. Kinnock: As these are matters of great concern, will the right hon. Lady tell us very clearly where she draws the line between research and development?

The Prime Minister: Where it is drawn by the antiballistic missile treaty.

Mr. Forth: Will my right hon. Friend undertake to instruct our representatives in the negotiations to enlarge the EEC that all details of costs to the United Kingdom and the Community should be given to the House before we are asked to approve such enlargement?

The Prime Minister: As my hon. Friend is aware, we reached agreement at Fontainebleau, and this included the proportion of enlargement costs that would be borne by this country. It is not possible to say precisely what they are while the negotiations are still incomplete. However, I shall do my best to see that they are laid before the House at the relevant time.

Mr. Wilson: Has the Prime Minister seen the report from the Australian Royal Commission, which surfaced yesterday, that previous British Governments had entertained a proposal for holding nuclear device tests in Scotland? In view of the anger about that proposal in Scotland, will she join me in condemning it as an act of aggression against the Scottish people?

The Prime Minister: A letter used in evidence at the Australian Royal Commission showed that in 1954 a location near Wick was considered as a possible area for a minor trial of a triggering device in support of nuclear weapon development. It was not a nuclear device. The area was quickly rejected because it was considered unsuitable.

Mr. Robert Atkins: asked the Prime Minister if she will list her official engagements for 19 March.

The Prime Minister: I refer my hon. friend to the reply that I gave some moments ago.

Mr. Atkins: Does my right hon. Friend agree that the French Government's deliberate procrastination over the development of the European fighter aircraft for use by the air forces of the United Kingdom, Germany, Italy, Spain and France is preventing the collaboration in that industry that we all want? In view of the imminence of international ministerial discussions on this matter, will she use her considerable influence with President Mitterrand to resolve, as a matter of urgency, French obstructiveness?

The Prime Minister: As my hon. Friend knows, a good deal of work has been done on the European fighter aircraft. A common staff target has been agreed between the five air forces, and the industries of the five countries are now doing a feasibility study. I expect that the Defence Ministers will meet in May to make their assessment. However, my hon. Friend is right to say that it will be difficult to resolve some of the problems. Should intervention be necessary, I shall not hesitate to make it.

Mrs. Renée Short: Does the Prime Minister agree with the statement made in the debate on the west midlands last Friday that a low wage is better than no wage at all?

The Prime Minister: I believe that it is better to work for a low wage and to have it topped up by family income supplement than not to have a job.

Sir Edward du Cann: Will my right hon. Friend make time today to note the mounting anxiety being expressed in all quarters of the House and outside it about the serious decline in the British merchant fleet? Will she consider whether she should appoint a senior Minister with responsibility for co-ordinating constructive Government policies to reverse that very worrying trend?

The Prime Minister: I am aware of the decline in the British merchant fleet, because of severe competition from other parts of the world. I recognise my right hon. Friend's point that it is of strategic significance to have a good British merchant fleet of considerable size. I shall take his point to heart.

Mr. Tony Lloyd: asked the Prime Minister if she will list her official engagements for Tuesday 19 March.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Lloyd: Is it not apparent to the Prime Minister that today we have another Budget for jobs? Will she specifically tell the House and the millions of unemployed people in the country when unemployment will begin to turn down dramatically? If the Prime Minister will not do that today, will she at least tell us that this Government have neither the wit nor the compassion to do anything serious about mass unemployment?

The Prime Minister: The hon. Gentleman is probably aware that the number of those in jobs increased by 342,000 over the year to September and by 480,000 over the last 18 months. The rise in the working population is still continuing. The proportion of the population of working age who are in work is higher in this country, at 66 per cent., than in West Germany at 61 per cent., France at 61 per cent. and Italy at 55 per cent. We shall create more jobs and begin to reduce the number of unemployed when industry is even more competitive and produces goods and services that people both here and overseas will buy in greater quantities.

Mr. Hill: Does my right hon. Friend agree that the Russians have breached the 1972 anti-ballistic missile treaty so many times in the last 10 years that there will have to be many safeguards if we are to develop the strategic defence initiative? Has my right hon. Friend had discussions with President Reagan about the safeguards?

The Prime Minister: Various accusations about breaches of the anti-ballistic missile treaty have been made, in particular about radars and the direction and position of those radars. The place to sort those out is in one of the consultative committees provided for in the antiballistic missile treaty. I believe that this subject will be taken up at the Geneva talks.

Mr. Pike: asked the Prime Minister if she will list her official engagements for Tuesday 19 March.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Pike: When will the Prime Minister take steps to stop the widening rift between the north and the south? When will the Government take steps to deal with the deprived regions of the country? Would not the first step be for the Government to take a positive decision and say that no development will take place at Stansted and that any public money that would have been used at Stansted will be used in the regions instead?

The Prime Minister: With regard to the alleged north-south divide may I point out—[Interruption.] It is not right to talk of a straightforward divide between north and south. Parts of the north are very prosperous—[HON. MEMBERS: "Name them."]—while other parts have very high unemployment. There are also parts of the south which have very high unemployment. However, public investment per head of the population in the last year for which figures are available was £89 in the north, compared with £76 as the English average. It was even higher in Wales and Scotland. Public investment was purposely higher in the north to help with the unemployment problem.

Mr. Heddle: asked the Prime Minister if she will list her official engagements for Tuesday 19 March.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Heddle: Is my right hon. Friend aware that council house rent arrears have risen from £74 million in 1980 to a staggering £188 million today? Is my right hon. Friend aware that many local authorities are thus denying to thousands of single homeless people the right to rent a home? Are not these local authorities flying in the face of the interests of their ratepayers?

The Prime Minister: My hon. Friend is correct. Rent arrears are far too high, and they are rising. The management is not good enough. Both the Department of the Environment and the Audit Commission have issued comprehensive guidance. It would be as well if the authorities followed this guidance and reduced the arrears, in the interests of their ratepayers.

Mr. Ewing: To return to the number of people in work, is it not true that 2 million fewer people are in work now than when the Prime Minister came to office in 1979 and that her economic policies have effectively destroyed 2 million jobs in this country?

The Prime Minister: As the hon. Gentleman will be aware, the amount of overmanning in British industry due to the refusal of the Labour Government to face fundamental problems, such as the steel industry, left us the problems to deal with. Had we not been able to deal with them, Britain would have had no industrial future because it would have had no competitive industries. It now has, thanks to this Government.

Mr. Hannam: asked the Prime Minister if she will list her official engagements for Tuesday 19 March.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Hannam: Is my right hon. Friend aware that development and exploration activity in the North sea is reaching record levels? Is this not due to the success of free enterprise, backed by a helpful tax regime? Will she apply similar tax incentives to the rest of the British economy?

The Prime Minister: My hon. Friend is right. The development of the North sea was a great tribute to private enterprise. It was done quickly and with great profit and benefit to Britain, especially to the north-east of our country, where it has provided many jobs for industries associated with North sea oil development. That was added to and assisted by the right framework of taxation policy. That is the right recipe—the Government set the framework and people take advantage of it in private enterprise.

Budget

Mr. Dennis Canavan: I beg to move, That leave be given to bring in a Bill to make the Chancellor of the Exchequer more accountable to Parliament on budgetary matters and to monitor his economic performance; and for connected purposes.
I am pleased to see such a good attendance for the First Reading of my Bill. I hope that there is a similar attendance at Second Reading and thereafter. My Bill was originally entitled the Finance Bill, but once the parliamentary establishment discovered that this would mean that the Treasury would have to rename its Bill the Finance (No. 2) Bill, pressures were put upon me to rename my Bill. Therefore, it is called the Budget Bill.
The purpose of my Bill is to bring our financial affairs under more public scrutiny, because I and an increasing number of people in the country believe that the Chancellor of the Exchequer is getting away with economic murder. He is a record-breaking Chancellor. He has probably broken more records than has Kenny Dalglish, except that the Chancellor is in the habit of scoring own goals. For example, he presides over record unemployment. He has a record deficit in manufacturing trade and a record low value of the pound against the dollar. We have record interest rates, a record number of bankruptcies, and the record of £3 billion of taxpayers' money spent on a 12-month vendetta against the miners. The Chancellor—where is he?—had the brass neck to tell us that that was money well spent. The British economy has been reduced to a shambles by an incompetent Chancellor, who has the brass neck to tell us to pull in our belts while he seems to become plumper and smugger. He does not seem to practise the austerity of the monetarist policies that he preaches.
At present, parliamentary accountability is limited. The Chancellor comes along here once a year in March to present his Budget statement. I have noticed that as soon as the Chancellor — where is he? — stands up, Mr. Speaker, you vacate your seat. I have often wondered about that. The content of his speech must make you as sick as it makes me. Then the Chancellor comes along with a mini-budget statement in the autumn in a vain attempt to repair some of the damage done by his main Budget in spring.
Under my proposals, there would be more scrutiny before and after the Budget. For example, many hon. Members on both sides of the House will have had mailbags full of letters from constituents complaining about the possibility of VAT being extended to children's shoes or books and periodicals, or about the taxation of pensions, or the need to have more public investment in jobs instead of giving tax handouts to the rich. What most of us do at present is photocopy the letter and send it across to the mandarins in the Treasury with a letter of support from ourselves, perhaps. Some bureaucrat at the Treasury just presses a key on the word processor and we get back a three-sentence reply. [AN HON. MEMBER: "Three months later."] Three months later, very often. To my mind that is not genuine consultation, and I hope that this is a point which appeals to hon. Members on both sides of the House.
I listened with interest to what the Chairman of the Select Committee on the Treasury and Civil Service, the right hon. Member for Worthing (Mr. Higgins), had to say

recently. He proposed the idea of a pre-Budget Green Paper—or a green Budget. I think that there is a lot of merit in that, and that is the principle of my Bill. But I also want post-Budget scrutiny so that we have continuous assessment of the economic performance of the Chancellor. A progress report would have to be presented to Parliament at least quarterly, and the Chancellor would have to come to the Dispatch Box and answer personally.
I have an example of the kind of progress report for which my Bill would provide. I do not want a subjective assessment; I believe in objective assessment. There would be chosen economic and other indicators and the performance of the Government would be measured on those indicators. Here is a progress report on the present Government since it took office in 1979; unemployment up 173 per cent.; job vacancies, down 50 per cent.; the pound against the dollar, down 47 per cent.; interest rates, increased 17 per cent.; company liquidations, up 201 per cent.; balance of trade in manufactures, down 175 per cent.; output of manufacturing industries, down 10 per cent.; economic growth rate, down 85 per cent.; council house rents, up 128 per cent.; prescription charges up 900 per cent.—and I suppose that we are in for another dose of the same medicine from the Chancellor this afternoon.
In case anyone disputes these statistics, I should say that the Library helped me to compile them, and I know for a fact that the Chancellor has a great respect for the Library staff.
So far the Chancellor has scored 0 out of 10. When I was a teacher I was always very reluctant to give any pupil 0 out of 10. I would try to give them 1 out of 10 if I thought that they were making an honest endeavour. So I looked at the whole Government record very hard and I found one small success. I am sure that when the Chancellor eventually comes in he will puff out his chest at the Dispatch Box and tell us all about it. He has managed to keep inflation to single figures. Even I would admit that that is an achievement, but I must remind him that we could have a zero rate of inflation if we reduced all economic activity to zero.
That is the economics of the graveyard and that is the direction in which this Chancellor is leading us. He is making Britain into an industrial and economic graveyard. If we are looking around for uneconomic units, he is the most uneconomic unit in this country. He should therefore be made redundant, and my Bill will make provision for that.

Hon. Members: Hear, hear.

Sir Michael Shaw: rose——

Hon. Members: Sit down.

Mr. Speaker: Order. Is the hon. Member for Scarborough (Sir M. Shaw) seeking to oppose the motion?

Sir Michael Shaw: Yes, Sir, I wish to oppose it, first because it is a quite unjustified misuse of the practice of the House and, secondly—[Interruption.]

Mr. Speaker: Order. The hon. Member for Scarborough (Sir M. Shaw) has as much right to be heard as the hon. Member for Falkirk, West (Mr. Canavan).

Sir Michael Shaw: The hon. Member's motion is a most excessive way of drawing one's virtues to the attention of the Committee of Selection so as to sit on a Finance Bill Committee.
More seriously, if it becomes a precedent, it will endanger a small right of the Back Bencher to be heard on important occasions. There are many other, more serious, objections to the proposition put by the hon. Member for Falkirk, West (Mr. Canavan), but I shall not dwell on them today.
The hon. Gentleman and I have in common a desire that the Chancellor of the Exchequer should be accountable to Parliament for the Budget. By happy chance, the Chancellor, whom I wish well, is here to account to Parliament this afternoon. Therefore, I shall limit my objections to the motion by allowing them to remain vocal, and I shall certainly not propose that the matter go to a Division.

Question put, pursuant to Standing Order No. 15 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of Public Business):—

The House divided: Ayes 103, Noes 4.

Division No. 162]
[3.42 pm


AYES


Alton, David
Davies, Rt Hon Denzil (L'lli)


Anderson, Donald
Davies, Ronald (Caerphilly)


Ashdown, Paddy
Deakins, Eric


Atkinson, N. (Tottenham)
Dixon, Donald


Beckett, Mrs Margaret
Dormand, Jack


Beith, A. J.
Douglas, Dick


Bennett, A. (Dent'n &amp; Red'sh)
Dubs, Alfred


Bermingham, Gerald
Duffy, A. E. P.


Bidwell, Sydney
Eadie, Alex


Boyes, Rolard
Eastham, Ken


Brown, Gordon (D'f'mline E)
Evans, John (St. Helens N)


Brown, R. (N'c'tle-u-Tyne N)
Fatchett, Derek


Buchan, Norman
Fisher, Mark


Caborn, Richard
Flannery, Martin


Callaghan, Jim (Heyw'd &amp; M)
Foulkes, George


Canavan, Dennis
Fraser, J. (Norwood)


Carlile, Alexander (Montg'y)
Freeson, Rt Hon Reginald


Carter-Jones, Lewis
Garrett, W. E.


Clark, Dr David (S Shields)
Hardy, Peter


Clarke, Thomas
Haynes, Frank


Clay, Robert
Heffer, Eric S.


Clwyd, Mrs Ann
Home Robertson, John


Corbyn, Jeremy
Howells, Geraint


Cox, Thomas (Tooting)
Hoyle, Douglas


Craigen, J. M.
Hughes, Robert (Aberdeen N)


Crowther, Stan
Hughes, Roy (Newport East)


Dalyell. Tam
Janner, Hon Greville





Jones, Barry (Alyn &amp; Deeside)
Redmond, M.


Kirkwood, Archy
Roberts, Allan (Bootle)


Lambie, David
Roberts, Ernest (Hackney N)


Lewis, Ron (Carlisle)
Rooker, J. W.


Lewis, Terence (Worsley)
Ross, Stephen (Isle of Wight)


Litherland, Robert
Sedgemore, Brian


Lloyd, Tony (Stretford)
Short, Ms Clare (Ladywood)


Loyden, Edward
Short, Mrs R.(W'hampf'n NE)


McCartney, Hugh
Skinner, Dennis


McKay, Allen (Penistone)
Smith, C.(Isl'ton S &amp; F'bury)


McKelvey, William
Smith, Cyril (Rochdale)


McNamara, Kevin
Steel, Rt Hon David


Madden, Max
Stott, Roger


Marek, DrJohn
Strang, Gavin


Marshall, David (Shettleston)
Thorne, Stan (Preston)


Maxton, John
Torney, Tom


Maynard, Miss Joan
Wallace, James


Meadowcroft, Michael
Wareing, Robert


Michie, William
Weetch, Ken


Nellist, David
Welsh, Michael


O'Brien, William
Williams, Rt Hon A.


O'Neill, Martin
Young, David (Bolton SE)


Park, George



Patchett, Terry
Tellers for the Ayes:


Pendry, Tom
Mr. Allan Rogers and


Pike, Peter
Mr. Kevin Barron.


Powell, Raymond (Ogmore)



NOES


Bulmer, Esmond



Kellett-Bowman, Mrs E.
Tellers for the Noes:


Rhodes James, Robert
Mr. Willie W. Hamilton and


Ward, John
Mr. David Winnick.

Question put and agreed to.

Bill ordered to be brought in by Mr. Dennis Canavan, Mr. Kevin Barron, Mr. Eddie Loyden, Mr. Allan Rogers, Mr. Martin Redmond, Mr. William McKelvey, Mr. Brian Sedgemore, Mr. Bill Michie, Mr. Gavin Strang, Mr. Ernie Roberts, Mr. Dick Douglas and Mr. Dennis Skinner.

BUDGET

Mr. Dennis Canavan accordingly presented a Bill to make the Chancellor of the Exchequer more accountable to Parliament on budgetary matters and to monitor his economic performance; and for connected purposes; And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 103.]

WAYS AND MEANS

Budget Statement

Mr. Deputy Speaker (Mr. Harold Walker): Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that at the end of the Chancellor's speech, as in past years, copies of the Budget resolutions will not be handed around in the Chamber but will be available to hon. Members in the Vote Office.

The Chancellor of the Exchequer (Mr. Nigel Lawson): In last year's Budget statement I charted the course for this Parliament. Today I reaffirm the Government's determination to hold to that course, the purpose of which is nothing less than the defeat of inflation. We have not wavered from that purpose. Nor will we, but the defeat of inflation, essential though it is, is not enough. We must also do what we can to combat the scourge of unemployment. Nor is there any conflict between these two objectives. So my Budget today has two themes: to continue the drive against inflation and to help create the conditions for more jobs.
I shall begin by reviewing the economic background to the Budget. I shall then deal with the medium-term financial strategy, with monetary policy, and with the fiscal prospect, both this year and next. I shall then turn to the Government's strategy for jobs, and the measures to implement that strategy. These will involve action on a number of fronts, including both tax reduction and tax reform.
As usual, a number of press releases filling out the details of my tax proposals will be available from the Vote Office as soon as I have sat down.

THE ECONOMIC BACKGROUND

I start with the economic background.
Once again, we can look back on a year of steady growth and low inflation. During 1984 as a whole, inflation remained at around 5 per cent. Output grew by a further 2·5 per cent., with investment up by 6·5 per cent. and non-oil exports by 9 per cent., to reach all-time record levels in each case.
Manufacturing industry recovered particularly strongly, with output up by 3·5 per cent.—the biggest rise in any single year since 1973—exports up by 10 per cent. and investment by 13 per cent. The current account of the balance of payments has remained in surplus, for the fifth successive year. By international standards, too, the economy has performed well. Our growth was above, and our inflation below, the European Community average.
Moreover, this progress has been achieved in the teeth of the coal strike, for which, in the short term, the nation has had to pay a heavy price. In the current financial year, the coal strike has reduced the level of national output by over 1·25 per cent. and worsened the balance of payments by some £4 billion. It has increased public expenditure by £2·5 billion and public sector borrowing by £2·75 billion. It has cost us confidence abroad and jobs at home.
But the costs, both economic and constitutional, of submitting to this strike would have been infinitely greater than the costs that have been incurred in successfully

resisting it, and it is a remarkable tribute to the underlying strength of the British economy that it has been able to withstand so long and damaging a strike in such good shape.
Looking ahead, we are now about to embark on what will be the fifth successive year of steady growth, with output in 1985 as a whole set to rise by a further 3½ per cent. Inflation may edge up for a time, perhaps to 6 per cent. by the middle of the year, but should then fall back to 5 per cent. by the end of the year and lower still in 1986.
While there can be no disputing the strength and durability of the economic upswing, there is equally no disputing the fact that it is marred by an unacceptably high level of unemployment—and this despite the fact that the latest figures suggest that employment has risen by half a million over the past two years, with a further increase likely over the year ahead.
If at home the past year has been overshadowed by the coal strike, internationally it has been dominated by the relentless surge of the dollar, which rose by a further 30 per cent. against all the major European currencies. To finance its massive budget deficit, the United States is importing a large part of the rest of the world's savings and exporting some of its own inflation.
This is not a sustainable state of affairs. As Federal Reserve chairman Paul Volcker last month testified to Congress, the United States is living on borrowed money and borrowed time; but meanwhile, it is not only America that is paying the interest.
All this has led to one of the most turbulent years in the financial markets within living memory. It has been, and will continue to be, a time for strong nerves and sound policies.

THE MEDIUM TERM FINANCIAL STRATEGY

We have already shown that we are not afraid to take action, however unpalatable, to keep the medium-term financial strategy on course in an unpredictable and uncertain world. That strategy was first launched five years ago next week. Our commitment to it remains as firm today as it was then. It was designed to bring down the rate of inflation and to ensure a reasonable growth of demand in money terms, and it has succeeded on both counts.
We are determined to maintain steady downward pressure on inflation. It is not in the gift of any Government to eliminate short-term fluctuations along the way, but the underlying direction has to be downwards. It is this objective which governs the desirable growth of total spending power in the economy, as measured by money GDP.
The Government's economic strategy has two key components: a monetary policy designed to bring down inflation and a supply side policy designed to improve the competitive performance of the economy.
The supply side policy is rooted in a profound conviction, born of practical experience both at home and overseas, that the way to improve economic performance and create more jobs is to encourage enterprise, efficiency and flexibility; to promote competition, deregulation and free markets; to press ahead with privatisation and to improve incentives.
The argument over which will have a bigger impact on demand—increased public expenditure or lower taxation — completely misses the point. The case for lower


taxation rests on supply side policy: lower taxes will help to enhance incentives, eliminate distortions, improve the use of resources and heighten the spirit of enterprise.
The great mistake of post-war demand management, which still has some devotees today, was to react to rising unemployment by injecting more money into the system, whether through the Budget or through the banks. So far from halting the upward trend of unemployment, this simply generated runaway inflation. That course we will not follow.
A policy for demand expressed unambiguously in terms of money provides a further important advantage, for it ensures that wage restraint will provide more jobs. I repeat today the undertaking I gave the National Economic Development Council last month: the medium-term financial strategy is as firm a guarantee against inadequate money demand as it is against excessive money demand.

MONETARY POLICY AND THE EXCHANGE RATE

Within the MTFS, the central role is played by monetary policy, for it is by controlling the growth of money in the economy that the Government are able to influence the growth of money demand. Last year I set target ranges of 4 to 8 per cent. for narrow money and 6 to 10 per cent. for broad money. Over the 12 months to mid-February, the targeted measure of narrow money grew at around the middle of its range, and that of broad money at just below the top of its range.
For next year, I shall be retaining the same two target aggregates. I attach equal importance to both. The target ranges for 1985–86 will be those indicated in last year's MTFS—that is to say, a reduction in monetary growth of 1 per cent. in each case.
There are those who argue that if we stick to sound internal policies, the exchange rate can be left to take care of itself. In the long run that may well be true, but significant movements in the exchange rate, whatever their cause, can have a short-term impact on the general price level and on inflationary expectations. This process can acquire a momentum of its own, making sound internal policies harder to implement. So benign neglect is not an option.
That is why I have repeatedly argued that it is necessary to take the exchange rate into account in judging monetary conditions. There is no mechanical formula which enables us to balance the appropriate combination of the exchange rate and domestic monetary growth needed to keep financial policy on track, but a balance still has to be struck, and struck in a way that takes no chances with inflation.
There can be no doubt about the Government's commitment to maintain monetary conditions that will continue to bring down inflation. Short-term interest rates will be held at the level needed to achieve this.

PUBLIC SECTOR BORROWING

While monetary policy is at the heart of the medium-term financial strategy, it needs to be buttressed by an appropriate fiscal policy.
The outturn for the public sector borrowing requirement for 1983–84 was £9¾ billion, or 3¼ per cent. of GDP. In my Budget last year I planned to reduce it substantially in

1984–85 to £7¼ billion, or 2¼ per cent. of GDP. In the event, this year's PSBR looks like turning out at £10½ billion, or 3¼ per cent. of GDP—the same as last year.
All but half a million pounds of this substantial overrun is directly attributable to the cost of the coal strike. I believe it was right to meet the large but once-for-all cost of keeping the economy going throughout the coal strike by borrowing, thus in effect spreading the cost over a number of years, but it is now necessary to return to the path I outlined last year.
That means that the PSBR for the coming year, 1985–86, will be set at £7 billion, equivalent to 2 per cent. of GDP. As this year, some £3 billion will be financed through national savings.
I have been urged by some to provide for a still lower borrowing requirement in order to impress the financial markets. Others have argued that the present high level of interest rates would justify a more relaxed fiscal stance.
There is nothing sacrosanct about the precise mix of monetary and fiscal policies required to meet the objectives of the medium-term financial strategy, but this is not the year to make adjustments in either direction. The wisest course is to stick to our pre-announced path. This means that, for the coming year, a substantial reduction in the PSBR must take precedence over our objectives for reducing the burden of tax.

PUBLIC EXPENDITURE

Given the need to ensure that the Budget deficit is of a size that can and will be soundly financed, lower taxes can be achieved only by maintaining the firmest possible control of public expenditure.
Controlling public expenditure is one of the most difficult tasks facing any democratic Government in the modern world. Public expenditure acquires its own momentum and creates its own vested interests. To control it requires constant vigilance, and a determination to succeed despite the inevitable setbacks. We have that determination, and have succeeded in bringing the growth of public spending below that of the economy as a whole. This achievement has required difficult decisions in successive public expenditure reviews, but there is no benefit to sound economic management or effective control from sticking to public expenditure figures which subsequent events have made unattainable.
As my right hon. and learned Friend the Chief Secretary made plain in the recent debate on the public expenditure White Paper, the normal pre-Budget review of the fiscal prospect has had to take account of changes in the economic scene since the public expenditure review in the autumn. Of these, the most important has been the coal strike, whose public expenditure cost in 1984–85 is estimated at some £2¼ billion—about £1 billion more than allowed for in both the autumn statement and the public expenditure White Paper, which explicitly assumed that the strike would end at Christmas. There will also be some further cost in 1985–86.
It now looks as if this year's public expenditure planning total will be exceeded by nearly £3¼ billion, of which over two thirds is attributable to the coal strike, but, quite apart from the coal strike, the upward pressures on public spending remain intense, not least from increased take-up of social security benefits and further local


authority overspending. In addition, since the White Paper was prepared, we have had to accommodate the effects of higher interest rates and a lower exchange rate.
I have therefore reassessed the adequacy of the reserves for 1985–86, 1986–87 and 1987–88 which were provided in the January White Paper. In order to provide a more realistic basis on which to plan and control the level of public spending, I have judged it prudent to add £2 billion to the reserve and thus to the White Paper planning totals for each of the three years. At the same time, I have further increased the estimate for debt interest in each year.
These increases in the size of the reserve will raise the planning totals for the next three years by about 1¼ per cent., but let there be no misunderstanding: the new totals still represent a tough target. No extra cash has been allocated to individual programmes. Calls on the reserve will still be judged on the strictest criteria. There is no slackening in our determination to curb the size of the public sector.
Public expenditure will continue to fall as a proportion of GDP, as it has, the coal strike apart, since 1981–82. Expenditure is planned to stay broadly flat in real terms at about this year's level, excluding the costs of the coal strike. To achieve even these new figures, future public expenditure surveys will have to be at least as tough as their predecessors; and there can be no let-up in the tight control of individual spending programmes within the cash limits set for the coming year.
On the other side of the public accounts, tax receipts, too, are now expected to be higher over the next three years, partly for related reasons, but not by as much. The scope I have for tax cuts this year is therefore only half the amount I said might be available in my statement to the House in November. In other words, the net effect after indexation of the measures I shall shortly announce will be to contribute some three quarters of a billion pounds to the £7 billion borrowing requirement I have set for 1985–86.

THE STRATEGY FOR JOBS

In determining the nature of those measures, within the overall framework of the medium-term financial strategy, my overriding objective has been to improve the prospect for jobs. It is important to be clear what this means. Jobs are created by firms that are competitive, efficient, profitable and well managed. This in turn requires a work force with the right skills, one that is adaptable, reliable, motivated and prepared to work at wages that employers can afford to pay.
The extent to which Government—let alone a single Budget—can bring this about is clearly limited. We cannot instantly inculcate the spirit of enterprise by Act of Parliament, or abolish latter-day Luddism overnight simply by adding a few more pages to the statute book.
We cannot even prevent trade unions from pricing their members out of a job. Last year, despite a further encouraging growth in productivity, wage costs per unit of manufacturing output rose by some 4 per cent. In the United States, Germany and Japan, unit wage costs actually fell. This is bad for our competitiveness and bad for jobs. Too much of the benefit of economic growth is currently being enjoyed in higher living standards for those in work, too little in the form of better job prospects for

those out of work. In a free society, the remedy lies in the hands of those responsible for collective bargaining throughout the economy.
However, limited though the role of Government is, it remains an important one: to prepare the ground in which enterprise can best flourish; to remove obstacles to the effective working of markets in general and the labour market in particular; to correct the deficiencies in our education and training that make it hard for industry—and individuals — to adapt to change; to construct a pattern of taxation that does least damage to incentives, and in particular does least to deter people from taking jobs at wages that businesses can afford.
We have made progress on all these fronts. Inevitably, it takes time for the effects to come through. That is not surprising — attitudes and behaviour acquired over decades cannot be changed overnight — and there is much still to be done; but there is no short cut. If it were possible to create jobs simply by boosting Government borrowing and Government spending, there would be no unemployment in the world today, for nothing is easier for a Government than to borrow and spend. Impatience is a bad counsellor.
In setting financial policy for the year ahead I have had one object in mind: the continuing reduction of inflation. Equally, in deciding my individual Budget proposals within that overall framework, I have sought throughout to make those changes that will do most to promote enterprise and employment.
Our attack on the evil of unemployment is clear, coherent and strong. My Budget today represents a further step along the road we have been taking since 1979. It will help us to ensure that more new jobs are created and that they will be new jobs that last.

EMPLOYMENT AND TRAINING MEASURES

I begin with some measures directly related to employment and training.
One of the most long-standing problems in this country is our failure to prepare our school-leavers adequately for work. Since it was first launched in 1983, the youth training scheme has proved to be a very successful bridge between school and work. I has also helped to make young people's pay expectations more realistic. But too many trainees are still reluctant to accept rates of pay which reflect their inexperience, and too many employers still fail to recognise that training is an investment in their own commercial interest. This is in marked contrast to our major competitors overseas.
The Government have therefore decided to promote a substantial expansion of the youth training scheme. Provided employers contribute a major share of the cost, the Government are prepared to provide further funds to launch this new initiative, over and above the existing £800 million a year of public expenditure on the YTS. The expanded scheme would offer places lasting two years for 16-year-old and one year for 17-year-old school-leavers, leading to a recognised qualification.
The main aim of all this is a better qualified work force. It would also be a major step towards our objective of ensuring that every youngster under the age of 18 will either be in full-time education, or in a job, or receiving training, with unemployment no longer an option. But first we have to get the expanded scheme in place. It will


require the active co-operation of employers, trade unions and school-leavers, which I am confident will be forthcoming.
The existing YTS provides foundation training and preparation for work. The expanded scheme will also involve occupational training for both the employed and the unemployed, geared to the needs of business and industry. In the long run, we would expect employers to meet the full cost, as those in other countries do, but I recognise that such a major change in attitudes may take time. I am therefore prepared to set aside a fixed sum in public funds to launch this new initiative and get it moving in the right direction.
My right hon. Friend the Secretary of State for Employment will be arranging consultations through the Manpower Services Commission about the quality of the training, the share of the cost to be borne by employers, and the level of trainee allowances. We aim to complete these consultations by the end of June so that a second year will be available for as many as possible of the 16-year-olds leaving school this year. Provided the outcome is satisfactory, I have undertaken to increase the Department of Employment's programme by £125 million in 1986–87 and £300 million in 1987–88. This expenditure will be partly offset by savings in social security payments and the ending of the young workers scheme, which will close for applications at the end of March 1986.
I am also providing the MSC with an additional £20 million in 1986–87 to finance a programme of appropriate in-service teacher training courses.
It has become increasingly evident that our output of graduates in high technology disciplines is not keeping pace with the expanding needs of industry. My right hon. Friend the Secretary of State for Education and Science will therefore be announcing later today a special programme, costing around £40 million over the next three years, to provide additional places in engineering and technology at selected higher education institutions. In this case the cost will be met from within existing public expenditure programmes.
While school-leavers are catered for by the youth training scheme, there remains the problem of the long-term unemployed genuinely seeking work. Under the community programme, local authorities and voluntary bodies provide temporary work for the long-term unemployed on projects of community benefit. This scheme, which at present provides 130,000 places has proved its worth, with a significant proportion of those who leave it going on to other jobs.
I have therefore agreed to make funds available to provide an additional 100,000 community programme places by June 1986. These places will be for 18 to 24-year-olds who have been unemployed for six months or more, and other adults who have been unemployed for over a year. To accommodate this, the Department of Employment's programme will be further increased by £140 million in 1985–86 and £460 million in 1986–87.
To an even greater extent than with the youth training scheme, the net public expenditure cost will be substantially less than the gross cost because of savings on social security benefits. The net addition to public expenditure as a result of all the proposals I have just announced will be £75 million in 1985–86, £300 million in 1986–87, and £400 million in 1987–88.
We also need to do more to remove legislative impediments to the effective working of the labour market.
However well intentioned, these can only lead to fewer jobs. Accordingly, my right hon. Friend the Secretary of State for Employment will be extending to all employers the provisions on unfair dismissal which currently apply to small firms. The qualifying period for unfair dismissal claims will thus become two years for all new employees. This is a reasonable period of time and should lessen the reluctance of some employers to take on new people.
In addition, my right hon. Friend will be issuing a consultative document about the future of the wages councils later this week. Wages councils destroy jobs by making it illegal for employers to offer work at wages they can afford and the unemployed are prepared to accept. This applies in particular to small employers and to youngsters looking for their first job.

Mr. John Evans: The right hon. Gentleman should be ashamed of himself.

Mr. Lawson: The document will cover a number of proposals for radical change, including complete abolition.
My right hon. Friends the Secretaries of State for Employment and for Education and Science will be issuing press notices later today giving further details of these measures.

Mr. Evans: Bring back sweatshops.

TAX REFORM

Mr. Lawson: I now turn to taxation.
This Budget carries forward the theme of tax reform I set out last year; reform designed to make life a little simpler for the taxpayer; and above all reform designed to improve our economic performance over the longer term, on which the jobs of the future will depend.
In my Budget last year I announced a radical reform of the corporation tax system. This had been preceded by the Green Paper on corporation tax issued by my predecessor in 1982.
I am satisfied that the right way to proceed with major tax reform is to issue a Green Paper first, as a basis for full and informed discussion, followed by legislation when the results of that discussion have been fully digested.
I therefore propose to issue a Green Paper later this year on the reform of personal income tax.
The computerisation of PAYE makes this the right time to review the system of personal taxation. Most of the work will be complete by the end of 1987 and the full range of facilities will be available by 1989. The Green Paper will therefore discuss a range of options opened up by computerisation, from non-cumulation to closer integration between the tax and benefit systems, and including in particular a reform of the present system of personal allowances.
It is the Government's firm policy to reduce the burden of income tax, but we need to make sure that the reliefs we can afford are concentrated where they will do most good.
The present structure of personal income tax is far from satisfactory. Too many young people start paying tax at too low a level, and too many families find themselves in the poverty and unemployment traps. The system discriminates against the family in which the wife stays at home to look after the children. It denies to the partners in a marriage the independence and privacy in their tax affairs which they have a right to expect.
There is therefore a strong case for changing to a new system of personal allowances more suited to today's economic and social needs. Under this, everyone, man or woman, married or single, would have the same standard allowance; but if either a wife or a husband were unable to make full use of their allowance, the unused portion could be transferred, if they so wished, to their partner.
This reform would produce a more logical and straightforward system. Far more people could be taken out of the poverty and unemployment traps, and indeed taken out of tax altogether, for a given sum of overall tax relief than is possible under the present system. It would end the present discrimination against the family where the wife feels it right to stay at home, which increasingly nowadays means discrimination against the family with young children.
Husbands and wives would each be taxed separately on their own income irrespective of the income of the other. The aggregation for tax purposes of a wife's earned income and investment income with her husband's would end, thus removing what has become an increasing source of resentment among women.
The Green Paper will set out full details of the proposals I have just outlined, as a basis for public discussion. After an appropriate period for consultation, it would be possible to legislate in 1987 and have a system on these lines in place by the end of the decade.
There is also a case for changing the tax treatment of pension funds, as part of a thorough-going reform of the tax treatment of personal savings generally. Any fundamental reform of this kind would, in the same way, need to be preceded by the publication of a Green Paper.
The House will, I am sure, be interested to learn that I have no such Green Paper in mind.
Nor, indeed, despite the unparalleled pre-Budget agitation, do any of the detailed proposals in my Budget affect the tax-deductibility of pension fund contributions, the tax-free nature of pension fund income and capital gains, or the anomalous but much-loved tax-free lump sum.
Meanwhile, I have a number of other important proposals for tax reform to announce today, which will both simplify the system and encourage enterprise.
First, on Capital gains tax, last year I was unable to do anything about the acknowledged defects of this tax, notably its combination of unfairness and complexity, and undertook to come back to it this year. This I now do.
I have decided that the right way to reform capital gains tax is to build on the important change made by my predecessor three years ago when he introduced the 1982 indexation relief. That relief, valuable though it is, and increasingly valuable as it will become, suffers from three serious limitations.
First, indexation does not cover the first 12 months of the ownership of an asset. This provision was introduced to discourage the short-term conversion of income into capital, but it has made the tax very much more complicated for the taxpayer. I am now in a position to remedy this defect. Hon. Members will recall that I announced last month measures to put an end to the practice known as bond washing, the principal device for converting income into less heavily taxed capital gains. Having done that, I now propose to abolish the 12-month rule. So far as most disposals are concerned, this will take

effect from 6 April. In the case of certain fixed interest securities, however, the rule will need to remain in being until the anti-bond-washing provisions take effect on 28 February 1986.
Second, the indexation does not at present extend to losses. I propose to remove this restriction.
Thirdly, the present indexation provision unfairly discriminates against those who acquired their assets prior to 1982. For them, the allowance is based not on the 1982 value of the asset but on its original cost. I now propose to remedy that injustice. The indexation allowance will henceforth be based on March 1982 values. Capital gains made prior to 1982 will still not be indexed, of course, but at least all purely inflationary gains made since that date will now be free of tax, irrespective of when the asset was acquired.
That three-pronged reform of capital gains tax will produce a fairer tax, make life simpler for the taxpayer, help the efficient working of the capital markets, relieve the burden on family businesses and encourage risk-taking and enterprise. Combined with the statutory indexation of the exempt amount, which will rise in 1985–86 to £5,900, these changes will remove some 15,000 taxpayers from liability altogether. Increasingly, the tax will be levied on real and not inflationary gains. With these reforms, I believe that the tax is now on a broadly acceptable and sustainable basis. The combined cost of the threefold reform I have announced is £155 million in a full year; but none of it falls in 1985–86.
I turn next to the stamp duties. Following widespread consultation, I have decided that the time has come to simplify and modernise these ancient duties. I propose in this Budget to sweep away 15 separate duties, including the contract note duty and the 1 per cent. duty on gifts. Altogether, the changes I am proposing should reduce by over 40 per cent. the number of documents which require to be stamped.
My final proposal for reform concerns development land tax. This is a particularly complex tax, which was introduced in response to the problem of soaring land values at a time of high inflation. Its chief practical effect is to discourage the bringing forward of land for development. This disincentive effect will grow as the gap widens between the 60 per cent. rate of development land tax and a corporation tax rate which is on the way down to 35 per cent.
I have therefore decided to abolish development land tax altogether, with immediate effect. At the same time, I propose to cancel all deferred charges under the tax. The net cost will be some £20 million in 1985–86 and £50 million in a full year. That compares, incidentally, with a collection cost of some £5 million a year. Development gains will, of course, continue to be subject to income tax, corporation tax and capital gains tax, in the same way as any other income or capital gains.
The abolition of development land tax will, I am sure, be especially welcomed by the building and construction industry. It will also remove no fewer than 200 pages of highly complex legislation from the statute book. This follows the abolition of the national insurance surcharge and the investment income surcharge in last year's Budget —three unwanted taxes swept away in two years.

BUSINESS TAXATION

I now turn to other aspects of business taxation. It cannot be repeated too often that it is businesses and not Governments that create jobs. The Government's responsibility is to foster the conditions which will encourage businesses to grow and to create more jobs. The measures I have to announce are designed with that end in view.
First, on corporation tax, the reforms I announced last year set out a new and improved framework of business taxation for the remainder of this Parliament and beyond, so this year I have only limited changes to make. A full list is, of course, contained in the Red Book.
As I promised last year, I have reviewed the scientific research allowance. Given the particular importance of expenditure on research and development if British industry is to hold its own in a competitive world, I have decided, exceptionally, not to reduce that allowance in line with the changes in the other capital allowances. A few minor changes apart, the scientific research allowance will remain at 100 per cent.
I have also decided to modify the new capital allowance system as it applies to short-life assets. While the new structure of capital allowances enables most plant and machinery to be written off over a period that more than fairly reflects its useful life, I accept that there is a problem with those assets which enjoy only a short life, in particular high technology assets.
Accordingly, from next year, a business will be able to exclude from its general pool of capital expenditure any asset which it believes will have only a short life, so that, if the asset is subsequently scrapped after, say, four years, it will be fully written off for tax over that period. I believe that this change will be widely welcomed. The benefit to business could rise to about £300 million in the early 1990s.
I now turn to a number of other detailed measures affecting business.
The number of employee share schemes has increased from 30 when we first took office in 1979 to some 850 today. The whole-hearted commitment of employees to the success of the companies in which they work is vital to our country's economic future. To maintain and build on this progress, I propose to reduce the retention period for profit-sharing schemes from seven years to five.
I propose to take action to deal with tax avoidance by partnerships, following the consultative document issued last year.
In my last Budget, I removed a competitive disadvantage to British manufacturers by levying VAT on imports. I have decided to modify the new regime in two respects.
First, I propose to relieve from VAT certain goods which are imported into this country solely for repair, or for processing which does not change their identity, and are then re-exported to their owners overseas. Secondly, goods which are temporarily exported from the United Kingdom and then reimported after repair or processing abroad, will bear VAT only on the value of the repair or processing. These reliefs will take effect on 1 June and have a once-for-all cost in 1985–86 of £30 million.
I propose to introduce secondary legislation to remove the constraint imposed by the Banking Act, which at

present prevents companies from financing themselves by a series of issues of short-term securities. That should provide a useful alternative to bank borrowing.
I have no major new proposals this year on the taxation of North sea oil. I have reviewed the economics of incremental investment in existing fields, but I have not been persuaded that there is a case for introducing new fiscal reliefs at this stage. My only proposal for change, apart for some minor technical measures, is to remove immediate petroleum revenue tax relief for onshore exploration and appraisal expenditure. Onshore activities are sufficiently low-cost not to need that special incentive.
In last year's Budget statement, I mentioned the Government's concern at the spread of unitary taxation within the United States, and the threat that this posed to the US subsidiaries of British companies. Since then, I am glad to note that several American states have abolished unitary taxation; but in others, notably California, no change has yet been made. We shall continue to press for action to be taken this year, and fully support the campaign being waged by the CBI and others on this issue.
Finally, I turn to a group of measures of particular importance to smaller businesses and the self-employed, a sector of the economy where an increasing proportion of the jobs of the future is likely to be found.
I have already announced a substantial reform of the capital gains tax. In addition, I propose to implement many of the proposals contained in last year's consultative document on capital gains tax retirement relief, notably to reduce the age for full relief to 60 and to extend relief to those who are obliged by ill health to retire before that age. This relief is particularly important to the proprietors of small businesses concerned at the capital gains tax they might have to pay when they come to sell their business on retirement.
Although the business expansion scheme has been in existence only two years, it has already made an impressive contribution to the promotion and growth of new businesses. Last year, almost 20,000 people took advantage of the tax reliefs offered by the business expansion scheme to invest some £100 million in more than 500 companies. Over half of this went to provide equity capital for new businesses.
I have two changes to propose. The scheme was designed to encourage investment by individuals in new and expanding businesses in risk areas. Accordingly, I propose to include within the scheme companies formed to carry out research and development. By the same token I propose to exclude from the scheme certain ventures which primarily involve property development. Building and construction will, of course, continue to be a qualifying trade.
Last year I undertook to review the scope of VAT relief for bad debts, a matter of considerable concern to small businesses. In the light of legislation now proceeding in another place on the reform of the insolvency law, I propose to widen the scope of the existing relief. The new rules will take effect as soon as the provisions of the Insolvency Bill are implemented, and will cost some £25 million in a full year.
I propose to increase the VAT threshold to £19,500 from midnight tonight.
Over the past five years, the ranks of the self-employed have risen by well over half a million, or some 30 per cent., and the growth in self-employment has been a


particularly marked feature of the encouraging growth in overall employment that has occured since the spring of 1983.
However, the self-employed suffer from one longstanding grievance so far as tax is concerned. While the national insurance contribution paid by an employee cannot be set against tax, the national insurance contribution paid by the employer on the employee's behalf can. Yet none of the national insurance contribution paid by the self-employed can be set against tax at all.
Today I propose to remedy this grievance. As from 6 April, tax relief will be allowed for half the graduated class 4 national insurance contribution paid by the self-employed. In addition, I have agreed with my right hon. Friend the Secretary of State for Social Services that, as from the beginning of October, the flat rate class 2 national insurance contribution payable by the self-employed will be reduced from £4·75 to £3·50 a week. The benefit of these reliefs to the self-employed will be £55 million in 1985–86 and £155 million in a full year.
All this adds up to a substantial package of measures to help small business and the self-employed, which I am sure the whole House will welcome.

PERSONAL TAXATION: TAXES ON SPENDING

I turn now to the taxation of personal income and spending. My Budget last year shifted some of the burden of personal taxation from earnings to spending. Today I propose to make a further move in this direction. Accordingly, I propose to increase the revenue from the excise duties by rather more than is required simply to keep pace with inflation — a less painful task now that inflation is relatively low.
I propose to increase the duty on cigarettes and hand-rolling tobacco by the equivalent, including VAT, of 6p on a packet of 20 cigarettes. This will take effect from midnight on Thursday. I do not, however, propose any increase at all in the duties on cigars and pipe tobacco.
I propose increases which, including VAT, will put between 1p and 2p a pint on most beer, depending on its strength, 1p a pint on cider, 6p on a bottle of table wine and about 10p a bottle on sparkling or fortified wine. In recognition of the current difficulties of the Scotch whisky industry, however, I propose to increase the duty on spirits by only 10p a bottle, well below the amount needed to keep pace with inflation. [HON. MEMBERS: "Hear, hear."] All these changes take effect from midnight tonight.
I propose to increase the duty on petrol and derv by amounts which, including VAT, will raise the price at the pumps by approximately 4p and 3¼p a gallon respectively. This does no more than keep pace with inflation. These increases will take effect from 6 o'clock this evening. As last year, I do not propose any change in the duty on heavy fuel oil.
I propose this year, however, to raise more revenue from the vehicle excise duty. For cars and light vans the duty will go up by £10 to £100. On the advice of my right hon. Friend the Secretary of State for Transport, the pattern of duty on lorries will be changed to correspond more closely to the amount of wear and tear that they cause to the roads. While there will be substantial increases in duty for some of the heaviest rigid lorries, for most lorries the rates will remain unchanged.
These changes in the excise duty will, all told, raise an extra £820 million in 1985–86, some £235 million more than is required to keep pace with inflation. The overall impact effect on the retail price index of these changes will be 0·5 per cent. This has already been taken into account in the forecast that I have given the House of 5 per cent. inflation by the end of the year.
I now turn to VAT. I have followed with interest the speculation that has built up over recent months about my alleged intentions for VAT. Most of it—such as the so-called proposal to levy VAT on books—has concerned matters which have not even been under consideration. But to have revealed this prematurely would not have stilled speculation; it would merely have concentrated it on those matters that were under consideration — a practice that no Chancellor, rightly, has sought to encourage.
I can now inform the House that, apart from one change I shall be proposing today, I do not intend to make any further extensions of the VAT base during the lifetime of this Parliament. This is, of course, a field in which European Community law has to be reckoned with and where we are bound by our treaty obligations, but as the House will be aware, where we are currently under challenge, we are vigorously fighting our case.
The one extension I propose to make concerns newspapers and magazines. At present, while all other advertising is taxed, newspapers and magazine advertising is not. There is no justification for this anomaly. It is one thing to maintain that newspapers and magazines should not be liable to VAT: quite another to argue that those who advertise in them should enjoy a similar immunity. Accordingly, I propose that, from 1 May, newspaper and magazine advertising should be subject to VAT. This will raise £30 million in 1985–86 and £50 million in a full year.
I also propose to change the VAT treatment of credit cards and similar payment cards—a part of the financial sector which has enjoyed exceptional growth over the past few years. I propose that, from 1 May, transactions between the companies providing the cards and outlets which accept them should be classified as exempt. This means that the companies will not be able to recover VAT in respect of such transactions. This will raise £15 million in 1985–86 and £20 million in a full year. It should not directly affect the charges made to card holders.
I also have a modest VAT concession to make. I have decided to extend the existing VAT relief for medical or scientific equipment bought with donated funds for use in hospitals and the like to cover computer equipment for certain medical uses. Customs and Excise will be announcing the precise details of the relief, which will take effect from 1 May.
Following extensive consultations, I propose to include in this year's Finance Bill legislation to implement most of the recommendations of the first two volumes of the Keith report on the enforcement powers of the revenue departments, including measures to deal with the problem of the late payment of VAT. This is expected to bring in extra revenue of about £50 million in 1985–86. By 1988–89, there will have been a cumulative once-for-all revenue gain of about £600 million. Proposals on the Inland Revenue aspects of the Keith report will follow in next year's Finance Bill.
The VAT changes I have just proposed will bring in £90 million in 1985–86, rising eventually to £215 million in a full year. They will have no impact on the RPI. The


additional revenue raised from the excise duties and VAT taken together will help me to lighten the burden of income tax.

PERSONAL TAXATION: INCOME TAX

Before turning to income tax, I should briefly mention capital transfer tax. Since 1979, the burden of this tax has been very significantly reduced, and I propose to maintain that position this year by raising the threshold and rate bands set last year in line with statutory indexation. In addition, I propose to widen the scope of the existing exemption for amenity land surrounding a house of outstanding heritage quality. I am sure that this will be welcomed by all those concerned with the preservation of our national heritage.
I now turn to income tax. On 6 April, the banks will move over to the composite rate system for the payment of tax on bank interest. I now need to legislate to put the corresponding composite rate payments by building societies on a similar footing, starting next year. This will not produce any additional revenue. As an administrative saving, I also propose to legislate this year to bring new loans above the mortgage interest relief ceiling into the MIRAS system by April 1987. The ceiling itself will remain at £30,000 for 1985–86.
I need to set the 1986–87 car benefit scales for those whose employers provide them with the use of a car. As last year, I propose to increase both the car and fuel scales by 10 per cent. with effect from April 1986. This will still leave the scale levels well short of the true value of the benefit.
To give further help to charities, I propose to increase from £5,000 to £10,000 the limit to which relief at the higher rates of tax is allowed for covenants.
I now turn to my main income tax proposals. I propose to make no change this year in the rates of income tax. Once again, I believe that it is right to concentrate most of the limited resources at my disposal on raising the starting point for tax. Increases in the basic tax thresholds benefit all taxpayers, but they give proportionately more help to those on low incomes. This year, a Budget for jobs and for enterprise has to give high priority to raising the tax thresholds.
The statutory indexation formula means that I should increase all the principal income tax allowances and bands by 4·6 per cent., which is the increase in the RPI over the year to last December, and then rounded up. For the higher rate thresholds and bands I propose this year to do just that. The first higher rate of 40 per cent. will be reached at a taxable income of £16,200 and the top rate of 60 per cent. will apply to taxable income above £40,200.
For the basic thresholds I can do more. Statutory indexation would imply an increase in the single person's allowance of £100. I propose to increase it by precisely twice as much — £200 — from £2,005 to £2,205. Statutory indexation would imply an increase in the married man's allowance of £150. Again, I propose to raise it by precisely twice as much—£300—from £3,155 to £3,455.
I propose to increase the age allowances this year by the same cash amount as the corresponding basic allowances. Thus the single age allowance will rise by £200 from £2,490 to £2,690 and the married age allowance will go up by £300 from £3,955 to £4,255.
These increases mean that most single people will enjoy an income tax cut of at least £1·15 a week and most married couples an income tax cut of at least £1·73 a week. Some 800,000 people on low incomes — 100,000 of them widows—who would have paid tax if thresholds had not been increased, will pay no tax at all in 1985–86. That is almost twice as many as would have been taken out of tax had the allowances merely been indexed.
The income tax changes I have announced today will take effect under PAYE on the first pay day after 17 May. Their cost is considerable: £1·6 billion in 1985–86, of which roughly half represents the cost of indexation.
The increase in the basic allowances of almost 10 per cent., or some 5 per cent. in real terms, means that for 1985–86 they will be more than 20 per cent. higher in real terms than they were in 1978–79, Labour's last year.

NATIONAL INSURANCE CONTRIBUTIONS

I have one last proposal to make. I have already set out the broad lines of the Government's strategy to improve the prospects for jobs. I have described a number of measures to improve training, remove legislative barriers to employment, and stimulate enterprise; and I have also raised tax thresholds substantially for the second year running; but I want to do more to improve job prospects for young people and the unskilled, among whom the problem of unemployment is most severe.
I have concluded that an effective response to this problem must include direct action in two related areas — to cut the costs of employing the young and unskilled, and to sharpen their own incentive to work at wages which employers can afford to pay.
I am therefore proposing, in collaboration with my right hon. Friend the Secretary of State for Social Services, a radical reform of the structure of national insurance contributions. The essential features of the contributory principle will be preserved. The changes will affect both employers' and employees' contributions.
Given the limited resources at my disposal, I cannot afford this year to make a further substantial reduction in the overall burden of employment costs, following the abolition of the national insurance surcharge in last year's Budget. I therefore propose to abolish the upper earnings limit for the employer's national insurance contribution, which for 1985–86 has been set at £265 a week.
Under existing arrangements, an employer pays in national insurance the same cash sum, which for the coming year would be roughly £28 a week, for all employees above the upper earnings limit, regardless of whether the employee is paid £15,000 a year or £50,000 a year. Under the new and arguably fairer scheme I am now proposing, the employer's liability will be the same flat 10·45 per cent. of earnings as at present applies below the upper earnings limit.
The £800 million raised by this change in a full year enables me to make a substantial reduction in the cost of employing people at the lower end of the earnings scale. There, instead of the uniform 10·45 per cent., I propose to introduce a system of graduated rates.
As now, there will be no national insurance payable for those earning below the lower earnings limit, which for 1985–86 has been set at £35·50 a week, broadly in line with the single person's pension, but for employees earning between this and £55 a week, the employer will in future have to pay only 5 per cent. instead of 10·45 per cent.; for


employees earning between £55 a week and £90 a week the new rate for employers will be 7 per cent.; and for those earning between £90 and £130 a week, the employer will pay 9 per cent. The full employers' rate of 10·45 per cent. will apply only for those earning over £130 a week.
These changes represent substantial reductions in the cost of employing the lower paid. They will significantly improve the flexibility of the labour market and the prospects for jobs. I recognise that employers cannot be expected to welcome the increased cost of employing higher paid workers, but for business and industry as a whole the increase in the cost of the higher paid will be fully offset—indeed it will be more than offset—by the reduced cost of employing lower paid workers.
Moreover, I propose to introduce a similar system of graduated national insurance contribution rates for the employees themselves at the lower end of the earnings scale. At present, those earning more than the lower earnings limit pay a flat rate of 9 per cent. on total earnings up to the upper earnings limit, and nothing on any amount they may earn above that limit.
This system makes national insurance contributions a particularly heavy burden for the low paid. I propose that, in future, those earning between £35·50 and £55 a week pay at the rate of 5 per cent. and those earning between £55 and £90 a week 7 per cent. Only those who earn above £90 a week will be liable to the full 9 per cent. on their earnings. However, I do not propose to abolish the upper earnings limit for employees' contributions. It is an integral part of the contributory system on which their benefit entitlement is based. Moreover, if it were abolished, those on the higher rates of income tax would face unacceptably high combined marginal rates, taking into account liability to both tax and national insurance contributions.
The changes I have proposed represent a substantial reduction in the burden of national insurance contributions on lower paid employees. In addition, as I have already indicated, I propose a corresponding reduction in the contributions paid by the self-employed. The Hate rate class 2 contributions, as I have already said, will be reduced from £4·75 to £3·50 a week.
My right hon. Friend the Secretary of State for Social Services will include legislation to give effect to this restructuring of national insurance contributions in the Social Security Bill now before Parliament, and I expect the new rates to take effect from the beginning of October. I should make it clear that these changes are not intended to affect benefit rights, and new rules will be introduced to protect those rights. Nor will the changes affect arrangements for the contracted-out rebate.
The overall cost of these changes will be £450 million in a full year, made up of £80 million less in employers' contributions, £270 million less in employees' contributions, and £100 million less in contributions from the self-employed. In 1985–86 the total cost will be £160 million.
The effect on job prospects will, over time, be substantial. The radical restructuring I have announced will encourage employers to take on the young and unskilled and give them, in turn, an incentive to seek work at wages that employers can afford. The cost of employing some 8½ million people on earnings of less than £130 a week will be reduced by almost £900 million in a full year. It will cost an employer £3 a week less to employ a young person or unskilled worker at just below £90 a week, and the take-home pay of some 3½ million people with earnings up to this level will be further increased, on top of the significant real increases in income tax thresholds I have already announced. Thus, a single youngster on just under £90 a week will pay about £1·80 a week less in national insurance on top of the reduction in his income tax bill of £1·15 a week—an overall increase in take-home pay of almost £3 a week.
The reduction in the total burden on the low paid—income tax plus employers' and employees' national insurance contributions combined — is even more dramatic. For someone on £80 a week it is cut by up to 30 per cent., and at £50 a week it is cut in half.
These are changes of a major order. They amount to a direct and powerful attack on disincentives to employment. They tackle the problem of unemployment where it is most acute. They complete my Budget for jobs.

CONCLUSION

In this Budget, Mr. Deputy Speaker, I have reaffirmed the Government's commitment to the defeat of inflation through the maintenance of sound money. I have made further radical proposals for taxation and national insurance, and abolished outright a third tax. In collaboration with my right hon. Friends the Secretaries of State for Employment, for Education and for Social Services, I have proposed a coherent and wide-ranging set of measures to promote new jobs. I commend this Budget to the House.

PROVISIONAL COLLECTION OF TAXES

Motion made, and Question,
That pursuant to section 5 of the Provisional Collection of Taxes Act 1968 provisional statutory effect shall be given to the following motions—

(a) Spirits (Motion No. 2)
(b) Beer (Motion No. 3)
(c) Wine and made-wine (Motion No. 4)
(d) Cider (Motion No. 6)
(e) Tobacco products (Motion No. 7)
(f) Hydrocarbon Oil (Motion No. 8)
(g) Vehicles excise duty (Motion No. 10)—[Mr. Lawson.]

put forthwith, pursuant to Standing Order No. 114 (Ways and Means Motions), and agreed to.

Mr. Deputy Speaker: I shall now call on the Chancellor of the Exchequer to move the motion entitled "Amendment of the Law". It is on that motion that the Budget debate will take place today and on succeeding days. The remaining motions will not be put until the end of the Budget debate next week and they will then be decided without debate.

Budget Resolutions and Economic Situation

AMENDMENT OF THE LAW

Motion made, and Question proposed.
That it is expedient to amend the law with respect to the National Debt and public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting any supply;
(b) for refunding any amount of tax, otherwise than by a provision relating to the insolvency of a person to whom goods or services have been supplied;
(c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
(d) for any relief other than relief applying to goods of whatever description or services of whatever description. —[Mr. Lawson.]

Relevant documents: European Community Document No. 10277/84, Annual Economic Report 1984–85 and the Unnumbered document Annual Economic Report 1984–85 (final version as adopted by the Council).

Mr. Neil Kinnock: The custom is for the Chancellor of the Exchequer to be congratulated on his Budget. A Chancellor who is able to cut down on his previous year's delivery time to a new "low" of one hour 12 minutes this year deserves to be congratulated.
There are certain aspects of the Budget which can immediately be commended. First, the Chancellor has relented about the changes in capital allowances, especially on scientific equipment and short-life investment goods. It is also appropriate for the Chancellor to receive support for making life easier for the self-employed who have to retire early through ill health. Most of all, we commend the Chancellor for the changes that he has made to national insurance contributions by both employers and employees. The cheers that were heard when he announced these changes were rather louder from the Opposition than they were from the Conservative Benches. Indeed, there was what could be called a deafening silence on the Conservative Benches, probably because the Chancellor's proposals were all contained in the Labour party manifesto for the 1983 general election.
It is a shame that the Chancellor has taken so long to make these changes, despite the appeals to do so that were made well before the last general election; appeals which have been repeated by me and by my right hon. Friends since then. Who knows how many jobs might have been saved if successive Chancellors had taken the opportunity to reduce the national insurance contributions, especially since this Government raised them by 50 per cent. after they took office in 1979.
There is much that is deserving of detailed attention and comment in this Budget, and I have no doubt that many of my right hon. and hon. Friends will want to do that. It is not the custom of the House that, in the speech immediately following the Chancellor, I should go into what could be called the nitty-gritty.

The Secretary of State for Trade and Industry (Mr. Norman Tebbit): Just as well for the right hon. Gentleman.

Mr. Kinnock: That was the nitty-gritty speaking. There is no one nittier and grittier than the Secretary of State for Trade and Industry.
The Chancellor deserves the courtesies that go with clearly having spent considerable time and energy on making his Budget and compiling his speech. The right hon. Gentleman has clearly put a lot of work into the Budget. The problem is that it is highly unlikely that a lot of work will come out of the Budget.
The Chancellor's advertisers, and, indeed, the Chancellor himself today, have repeatedly used the phrase "a Budget for jobs." Indeed, we have heard something even stronger. We heard the Chancellor referring to the scourge of unemployment and the evil of unemployment. Let us hope that that is a harbinger for much bigger actions in future to deal effectively with unemployment.
We have heard all about Budgets for jobs before. We heard it last year. In one of the dying phrases of his speech last year the Chancellor talked about the Budget for jobs, and in the succeeding year unemployment in Britain increased by 143,000. That has been the case in each of the other six Budgets for jobs that have come from the Chancellor and his precedessor. All that we have seen after each of those Budgets for jobs has been a remorseless increase in unemployment from 1·25 million to the now registered 3·25 million, but actual 4 million unemployed in Britain.
On that basis, sadly, the Budget will fail Britain again. Unemployment in Britain is higher now than ever before, and it has stayed higher for longer than ever before. It is more worrying to more people, both the employed and the unemployed, than it has ever been before. It is more financially and socially expensive and wasteful than it has ever been before. Action to fight unemployment is more necessary than it ever has been before.
I know that Conservative Members are not too keen on listening to the unemployed—at least, not to all of them —but perhaps those who are keen on listening to the unemployed, on trying to relate to them and on campaigning on their behalf, can prevail upon their colleagues to ensure that we get that action which is more necessary than ever before. Unfortunately, little that the Chancellor said this afternoon properly recognises or responds to the unemployment which is higher, has lasted longer and is more worrying than ever before.
We have heard the propositions that relate to the youth training scheme, to the community programme and to an expansion—although we did not hear exactly how much —of in-service teacher training. Let me say this about the YTS proposals, as far as we could distinguish them. The right hon. Gentleman talked about unemployment not being an option. That sounds like an encouraging phrase, but from the lips of the Government it is an ominous phrase, especially since we heard of the net costs of the scheme. Therefore, we are forced to conclude that there is a strong likelihood that the Government will withdraw benefit entitlement from young unemployed people who do not find themselves suited by training schemes or who cannot get work or education, and who therefore want to use unemployment benefit for the purpose for which it was originally paid at the beginning of the century—to look for work.
Are the Government proposing—I shall gladly give way to have my question answered — to withdraw entitlement to benefit from unemployed young people? If they are, it will be a repeat of a tragic part of our history.
My father went to a training camp for training in the 1930s. The penalty for not doing so was withdrawal of his dole. It may be that, 50 years later, the youngsters of our generation are being offered exactly the same—absence of options, reduction of freedom—as a consequence of not wanting to undertake the form of forced training which the Government will be operating. Are we to have a conscriptive scheme? Are we to have a coercive scheme? Or are young people to retain their entitlement to benefit if they want to look for jobs, as well as getting any advantages that go with the expansion of the youth training scheme? The whole country and every youngster in it will want to know the answer to that question.

The Chancellor of the Exchequer (Mr. Nigel Lawson): Had I any new proposals to make on that front, they would have been contained in my speech.

Mr. Kinnock: We are now looking for an undertaking from the Government, and we shall press this continually, that, having not made or proposed any such changes today —if that is what the Chancellor means—no changes will forbid the payment of benefit to unemployed youngsters. That would be an elementary injustice and the young people of Britain would not tolerate it. They want jobs, education and training. They do not want to take those under coercion, and the Chancellor and other Ministers had better get hold of that.
We have heard about the Government's policy on wages councils. That is about the most squalid of all the Government's policies on the labour market. We are being told that the real inhibition to the development of our economy is the £1·19 an hour that is offered by the hairdressing wages council, or the £1·70 an hour that is guaranteed by the catering wages council. If they were enforced there might be something more to be said, but last year inspectors made 10,000 notifications that employers had broken the regulations of the wages councils, and two prosecutions arose out of them. If the right hon. Gentleman is concerned about personal freedom, good labour markets and decent employer-employee relations he should be getting those inspectors to enforce the law as it has stood since 1919 and as it has been upheld by successive Tory and Labour Governments.
What the country really needed today from the Budget was expansion, opportunity, justice, enterprise, and, most of all, jobs. This stagnant Chancellor has, in the face of all those requirements, simply given us a stalemate Budget which gives with one hand and takes away with the other, and which even threatens to jeopardise freedoms which have been narrowed over recent years.
The Chancellor has today again turned his back on millions of our fellow citizens who are unemployed and millions who are poor. He has turned his back and waddled away from them, and he will not be forgiven for doing that. He has only just started to wake up to the fact that the assistance necessary to sponsor growth in this economy is a direct obligation of Government.
Nobody claims that recovery can come only from Governments. Nobody claims that Governments must bear the full responsibility. But modern Governments can and must create the conditions in which what the Chancellor called the evil or scourge of unemployment can be fought effectively and vanquished by the Government and those prepared to assist them.
The fact is that there is no need for the Chancellor to insist on maintaining the course, as he put it. There are real and realistic alternatives. Those real and realistic alternatives have been put to him by the CBI, the road hauliers, the construction industry, the TUC, the National Economic Development Council and by a great chunk of the Conservative party in the House and throughout the country. They were put to him long before others by the Opposition.
The very least that the Chancellor could have done today was to announce that he was prepared to provide an additional £3,500 million for investment and repair in housing, roads, sewerage systems, gas and electricity supply industries, training and research and development. He could have done that. He was prepared to find £2·5 billion to fight the miners. Why is he not prepared to do it to fight unemployment? That would show a real sense of priority on the part of the Government, and the jobs generated in those spheres as they have been listed by us and by others would be real jobs, not make-work schemes, not cosmetic covers for the unemployment figures. They would all be true contributions to the efficiency, safety and fairness of our society and our economy.
The cost of not undertaking that major task of repair and development will only get higher as time goes on. The bills will only be bigger if that action is neglected now. The Prime Minister is fond of telling us that we must not maintain borrowing because we do not want to leave a debt to our children. It is very strange that the right hon. Lady is prepared to leave them a legacy of decay and danger because the Government will not undertake the proper expenditure now. Somehow she does not care that, by not spending, she and her Government are not only creating problems now but are creating despair for our children, about whom I know she cares. That is what the Government are doing by showing their willingness to borrow to maintain unemployment instead of borrowing to undertake new investment and provide new employment.
When employers, industrialists, analysts, councillors, the Opposition parties and the Conservative party in substantial and increasing measure tell the Chancellor of the Exchequer that he is wrong, what makes him think that he knows best? It cannot be his record, can it?
The Chancellor of the Exchequer is the parent of the medium-term financial strategy, the great design that was supposed to set and to keep "financial discipline"—as the right hon. Gentleman likes to put it — in the economy. Since they introduced that strategy in the 1980 Budget, the Government have destroyed 1·25 million more jobs than even they planned to destroy. In that process they have spent 10 per cent. more money than they intended to spend. They have printed 20 per cent. more money than they planned to print. They have borrowed £20,000 million more than under that medium-term financial strategy they planned to borrow.
The Chancellor's brainchild of a strategy was intended to bring "a significant reduction," as the document put it, in interest rates. Instead, real interest rates have been at record levels for record periods of time and, in periods of that time, have been 50 per cent. higher than they were under the previous Labour Government.
The right hon. Gentleman is the first Chancellor to have presided throughout his whole term of office over a manufactured trade deficit. He has presided over a bigger fall in the value of the pound than any other Chancellor in British history. He is the man who thinks that we have


a recovery when we have 4 million unemployed. He is the man who thinks that in this technological revolution Britain can depend on jobs which, as he has previously put it,
are not so much low tech as no tech".

He is the man who told the House last July that the expenditure on the miners' dispute—2·5 billion—was a "worthwhile investment for Britain". This is the man who will not recognise that the ruinous cost of maintaining unemployment in Britain is the greatest single factor blocking even his desire, his plans, for durable growth, stability and confidence in our country. He has got himself into the position where even his own plans for tax reform and tax cuts are sabotaged by his own policies of higher unemployment.
This is the man who told us on Sunday, in his interview with Mr. Harris in The Observer, that
financial discipline
is necessary because it is
exactly the same with a country
as it is for
any housewife".

Would any housewife leave holes in the roof for want of some borrowing in order to undertake repairs? Would any housewife deliberately keep her grown-up children at home out of work rather than help them to get a job in the future? Would any housewife give money to a rich uncle rather than give anything that she had to spare to poor parents? Housewives would not do that, but that is exactly what the Government do.
All those distorted priorities, all that neglect of unemployment, all those wasted resources, all the meanness towards the poor and the old, are features of this Government. That is their "financial discipline", and it would not be the financial discipline of any ordinary housewife in the land. The result of those policies is that there are more poor people living in deeper poverty in our country now than for decades past, and the Chancellor has done nothing truly effective to help them today.
The higher tax thresholds and the pension and benefit increases which can be anticipated this year will not even keep those who depend upon those incomes at the levels at which they are now, because the Government's policy of increasing water, gas and electricity charges rents, rates, transport fares and prescription charges and the petrol rises will eradicate in short order any benefit that comes from those increases. Indeed, today, a week after we heard of the £2 prescription, we have the £2 gallon of petrol, and everybody knows exactly what the knock-on effect of that will be.
This country needed a Budget for jobs and for justice. Britain needed a Budget for investment and for modernisation, a Budget which would help people to help themselves. That is the Budget which the Opposition would offer now and which people throughout this country want, because they recognise that it is a vital obligation of the Government to sponsor recovery.
The Chancellor has responded to the deeply felt needs of the country by more of the policies that have already brought idleness and injustice on a massive scale. This Budget will not give scope for improvement, and it will not arrest or reverse the decline or decay in our economy and our society. It is not a Budget for healing divisions, for householders, for business, for giving security to the old, or for giving real opportunity and support to the young. Indeed, it is not even a Budget which could

reasonably be expected, if there were any serious competition from within the Government, to save the career of the Chancellor of the Exchequer.
The right hon. Gentleman has told us that he has battened down the hatches and is staying on course. He is not on course. He is travelling in circles and sinking all the time. In this coming year we want the people of conscience and courage who exist on the other side of the House to join us to stop the right hon. Gentleman dragging our country down with him.

Mr. David Knox: I should like to congratulate my right hon. Friend the Chancellor on his presentation. I have heard more exciting Budget speeches, but I certainly have not heard a briefer one. I regard both those remarks as complimentary because, in common with many people, particularly outside the House, I am getting a bit tired of excitement from Chancellors of the Exchequer. All such excitement does is to cause confusion and extra work and undermine the activities of people who are trying to run business and commerce in this country.
I commend my right hon. Friend on his brevity, too. In the past, I have listened to some very long and boring Budget speeches, and I prefer the shorter version.
I must confess that there were rather more items in the Budget which I found myself able to welcome than I had anticipated. I welcome very stongly the substantial increases in the thresholds for income tax, particularly for those at the bottom end. That is a welcome element of social justice.
I welcome also the changes in the employer's national insurance contribution. It will be fairer than the existing system; and fairness, or an appearance of fairness, is most important. The excise duty increases this year are tolerable, and, as one who enjoys a glass of whisky, I find the increased duty on a bottle of whisky almost reasonable. I am pleased, too, that the VAT threshold has been increased, though my right hon. Friend might have increased it by somewhat more than he has.
I am sure that all hon. Members join me in welcoming the fact that there is to be no change in the tax treatment of pension funds. It is unfortunate, however, that the Chancellor did not make this apparent some time ago. Much concern was caused to people by speculation about what might happen to pension funds. Among them were many who were looking forward to retirement and who were wondering what they would receive and whether it would be as much as they had anticipated.
Firms were also concerned because they anticipated that they might have to introduce pension fund changes which would result in increased costs to them. Thus, although I welcome the fact that there is to be no change, it is unfortunate that that was not made clear earlier.
I welcome the fact that there is to be no VAT on books, newspapers, journals, children's shoes and children's clothes—all items about which we heard much in recent weeks. I have no great objection to VAT being levied on newspaper advertising, because that would merely bring it into line with other forms of advertising.
I welcome the promised Green Paper on the reform of income tax. I hope that it will lead to a measure of integration between income tax and benefits. That has


been needed for a long time, and I hope that we shall start more positively on that road as a result of the publication of the Green Paper.
I come to some of the wider issues of economic policy which arise from the Budget. The principal economic problem facing Britain today is unemployment, and on its effects on unemployment the Budget will ultimately be judged, and rightly so. The Chancellor claims that it is a Budget for jobs. I hope that I shall be proved wrong, but I fear that it falls short of what is required to make a real impact on unemployment. I say that, first, because the Chancellor did not give details of any plans to try to stabilise the international monetary situation, and, secondly, because he has done nothing to increase substantially the level of domestic demand.
In the first 25 years after the war we had relative stability in exchange rates under the terms of the Bretton Woods agreement. There was, therefore, a stable international economic order under which countries, co-operating with one another, could rebuild, develop and expand their economies. That provided Britain with the conditions which made it possible to operate the economy more efficiently and effectively than at any time in our history.
In the early 1970s, through no fault of ours, Bretton Woods broke down. Unfortunately, it is not possible to recreate it. However, the most important action that the Government should be taking today is to work with our friends, particularly in the European Community, to create a greater measure of economic stability in the world, for there is no chance of permanent economic recovery so long as the present economic chaos remains.
The fact that the pound is worth about half what it was worth against the American dollar four years ago and that its value has declined by about a third in the last 18 months, with all the disruption to our domestic economy that that has caused, is evidence of the urgent need for action to reduce fluctuations in exchange rates. Continual changes in the value of sterling are more damaging to our economy than high or low exchange rates, damaging though the latter can be.
Immediate unilateral action which Britain could take, which would have beneficial results, is to join the exchange rate mechanism of the European monetary system. That would provide us with a degree of stability for 60 per cent. of our trade. It would be a step forward which would make it easier for the countries of the European Community to speak with one voice in international economic affairs and to take initiatives towards the reintroduction of greater international economic stability, particularly in terms of initiatives with the United States and Japan.
We shall of course, be told that the time is not right for Britain to join the exchange rate mechanism of the EMS and that membership would restrict our freedom of manoeuvre. The absurdity of that argument is shown only too clearly when one asks, "What freedon of manoeuvre?"; because there is none and there has been none for some time.
Even though nothing has been said about that today, I hope that there will be an early announcement that Britain is to join the exchange rate mechanism of the EMS and that then, with our friends in the Community, we shall use the consequent international economic muscle to try to bring

about a greater measure of economic stability in the world. That would benefit the economies of every nation. That is important for Britain because, without it, our domestic economy will inevitably remain weak and unemployment will remain at an unacceptable level.
An improvement in the world economy, though an essential prerequisite to strengthening the British economy, will not cure our economic problems or of itself bring back full employment. It will require a substantial increase in the level of demand in the British domestic economy to take up the slack and bring people back into employment.
It is nonsense to suggest that insufficiency of demand is not one of the main causes of unemployment. Usually that is argued on the basis of anecdotal evidence of some prosperous people and rising consumer sales. If demand were increased and the unemployed brought back into employment, more people would become prosperous, the already prosperous would become more prosperous and consumer spending would be even higher, quite simply because there would be more to share around.
Demand will not rise automatically. Only the Government can make it rise other than marginally. It can be done by reducing taxation while not decreasing public expenditure or by increasing public expenditure while not increasing taxation, or by a mixture of the two. In other words, the Government can increase demand by increasing the public sector borrowing requirement. There is plenty of slack in the economy today in terms of unused or under-utilised capital and labour to enable that to happen without any inflationary danger.
Only adherence to the now discredited theories of monetarism and to the medium-term financial strategy has prevented the Chancellor from increasing the PSBR today. He should have cut taxes by more than he proposes or, preferably, in present circumstances, announced a substantial programme of public investment in the infrastructure. That is desperately needed and it would have been of great benefit to the hard-hit construction industry and those who work in it.
The effects of the tax cuts that the Chancellor announced are peanuts compared with the measures that should have been taken to enable us to return once again to full employment. It is no good thinking that tax incentives for businesses, schemes to encourage the establishment of new small businesses or other measures to improve the supply side—however admirable these may be in themselves and however useful they may be in the long term — will have any effect on the overall employment level in the absence of an increase in demand. Those measures will only attract jobs to particular areas, types of production or types of firm at the expense of jobs elsewhere. Jobs exist only when there is a demand for what is produced. Without that demand, there are no jobs. Without increased total effective demand in the economy as a whole, there cannot be significantly more jobs in the economy as a whole, and unemployment will remain at its present unacceptably high level.
The same is true of tax incentives to individuals. There is no evidence that the tax incentives introduced in the 1979 Budget have had any effect on unemployment, although they might have had a beneficial effect if they had been accommpanied by an increase in total effective demand. The changes announced by my right hon. Friend concerning the community programme and training are, of course, welcome, but they do not involve the creation of


real jobs. The numbers involved will be small and there will be a marginal improvement in the unemployed statistics, but not much more than that.
If we really want to bring the vast army of the unemployed back to work, we must aim to increase the rate of economic growth. The Chancellor's projected rate of growth for the coming year is just over 3 per cent. which, if achieved, will have no impact on unemployment, which will continue at about its present level. A real Budget for jobs would have aimed at a growth rate of 6 or 7 per cent. which, given the degree of slack in the economy, would have been sustainable for many years. That would have involved a substantial increase in the public sector borrowing requirement which would have been manageable because of our present volume of savings. I regret the fact that that has not been done. I am afraid that the Chancellor's Budget judgment leaves much to be desired.

Mr. Gregor MacKenzie: Over the years, you and I, Mr. Deputy Speaker, have heard a number of Budget speeches. This one had the merit of being short in length, but it was also rather short on ideas. This Budget had been much heralded as a Budget for jobs. Like the hon. Member for Staffordshire, Moorlands (Mr. Knox) I worry about that aspect. If this was a Budget for jobs, goodness knows what it would have been like if it had been a Budget for something else. It strikes me that the Chancellor has not got to the core of the issue that worries every one of us—unemployment.
Sometimes Chancellors forget that government is about people. Sometimes they forget that Budgets are about people and that, these days, people are more concerned about their jobs and the jobs of their children than about any other aspect of life. They are concerned that their young people should have jobs. For all this talk about YTS and so on, people want their families to have real jobs which are created by industry with the assistance of the Government. There is no point in giving a young person some sort of training for a couple of years only to throw that young person onto the scrap heap at the end of the period. Unemployment should loom much larger in the Chancellor's mind than it did in his speech today.
The Chancellor seems to forget totally the social evils brought about by unemployment. Frequently we listen to the Prime Minister moralising about the values of family life. Nothing disrupts family life more than unemployment. The Prime Minister often moralises about all sorts of other social evils, but I believe that disillusionment, especially among young people, about unemployment is leading to hooliganism, vandalism, glue sniffing, drug taking and what we have seen during the last few weeks —which I think is now called "Millwallism". They are the work of unemployed young people. The hon. Member for Moorlands, as a Scot, knows as well as I do:
For Satan finds some mischief still
For idle hands to do.
Chancellors sometimes forget that that is a social problem. Above all, the skills and talents of hundreds of young people are being wasted. Those skills and talents could be used to create wealth.
A number of us are worried about unemployment. Any Government who do not make reducing unemployment their first priority are failing in their duty to this generation and future generations. That is not just my view. Only the

other day, a poll conducted in Scotland investigated people's priorities. The poll showed that two out of three people said that they would much rather the Chancellor used the nation's resources to create jobs than to cut various taxes.
Tax cuts may be welcome to some, but the Chancellor deludes himself if he believes that people dash off to invest in industry the few pounds' benefit they receive from tax cuts. All too often, instead of being invested in industry by the individual saver and investor, that money is spent on holidays abroad or on a BMW instead of a British-made car.
I shall cite the number of unemployed people in my constituency, and I hope hon. Members will forgive me for making a parochial point. Tax cuts would be of no interest to the 7,332 people unemployed in my constituency. About 2,946 of them have been unemployed for more than six months, another 2,154 for more than a year and 1,360 for more than two years. About 400,000 people are unemployed in Scotland and nearly 4 million are unemployed in the United Kingdom as a whole.
Recently, the Prime Minister told me in answer to a question that £1·497 billion was spent on unemployment benefit. That figure does not include the people who are taken off employment benefit after a year or those on supplementary benefit. That is a dreadful waste of the country's money.
We talk about the benefits from North sea oil. The Prime Minister has told me that our revenue from North sea oil is about £8·8 billion and that 17 per cent. of that money is spent on unemployment benefit alone instead of to create jobs. We are paying people to kick their heels. I believe that during the next few months we should give more thought to that aspect.
The hon. Member for Moorlands stressed, as did the TUC and dozens of other organisations, that to improve the economy we must first improve the infrastructure. The Government have a serious obligation to improve our road system, our rail system and all other forms of public works. That would be of tremendous advantage in helping to reduce unemployment. I am a bit simple about such matters, but it strikes me as exceedingly odd that, at a time when in Scotland we need houses and houses are crying out for modernisation and repairs, hundreds of people in the construction industry should be on the unemployment list. That is beyond my comprehension and, I am sure, beyond the comprehension of everyone.
Ministers constantly tell us, and I accept it, that if we do not do more for industry and if it does not become more competitive, we shall fall behind in the international race. Recently, I read that we were one of the most inventive countries in the world. More inventions are patented here than anywhere else in Europe. Sadly, because of a lack of resources and because the Government are not prepared to provide assistance new inventions are developed and manufactured abroad.
The Government's whole approach to industry worries every one of us. A clue to that is that the Government do not think hard enough about industrial problems. A few years ago I heard a Conservative Member—I dare not mention him by name as he is a young man for whom I have considerable regard, and it would not do his prospects in the Tory party any good—say that he wished that Treasury Ministers knew more about industry than they did about money. I wonder whether he has changed his mind, because I heard last week that New York hotels


were paying tourists 98 cents for a pound. That does not strike me as a blessing bestowed by Treasury Ministers. If they knew what they were doing, they would ensure that our revenue from the North sea—instead of 17 per cent. of it being spent on unemployment benefits and so frittered away — would be spent on research, development, training and investment in the modernisation of our older industries, as my right hon. Friend the Member for Islwyn (Mr. Kinnock) has just said.
I should like the Government to spend more money on an effective regional aid programme. I cannot accept what the Prime Minister said at Question Time, when she claimed that we were not two nations. If the Prime Minister and her Ministers really visited the towns they would discover that there is a north-south divide. That is the sort of situation that the Labour party certainly wishes to end. The measures that I have outlined are the only way to create the jobs, and so the wealth, which the country sadly needs.
Finally, for the past six years we have been told that we must be patient. Some of us are beginning to lose our patience. It is all very well for the Chancellor of the Exchequer to say that he now has inflation at only 4 or 5 per cent., but the cost of that is high unemployment. I do not believe that things are getting much better, and will never believe that they will get better until the Government have a change of heart and a change of policy. Nor will the millions who are unemployed in this country.

Dr. Alan Glyn: I have a great deal in common with the right hon. Member for Glasgow, Rutherglen (Mr. MacKenzie). First, we have both heard Budget speeches from many Chancellors of the Exchequer. Today's Budget certainly had the virtue of being short and simple. I understand what the right hon. Gentleman said about unemployment, as, I am sure, does the Chancellor of the Exchequer. However, it is not easy to say how much money is spent on unemployment benefit and how much of it could be transferred to benefits in employment. I do not understand and never have understood that equation. Even successive Chancellors have been unable to carry out that equation. An attempt was made by a Government to inject money into the economy and to create jobs, but it failed. I wish that an easy solution could be found for what the right hon. Gentleman correctly described as one of the greatest social evils of our time.
The right hon. Gentleman talked about two nations. We all know from personal experience of people who have come from the north to the south for jobs, and of their incredible frustration when they find that they cannot be housed or bring their families with them. I join the right hon. Gentleman and the House in a desire, not only to make the north and south one, but to create as many jobs in the north as are available in the south where, incidentally, employers are waiting to take up people to fill vacancies.
The Budget must be considered as a whole, in terms of what it will do in future and in terms of what it does as a platform on which we can build. In the long term, it lays the foundations for the growth and creation of new jobs. It does not prop up old industries, which we have been

inclined to do rather than to create new industries in line with modern demand. That is a legacy which it will be extremely difficult to overcome.
Unemployment is one of the terrible hurdles that we must overcome, and if we are patient, I am sure that we shall do so. I agree with the right hon. Gentleman that the creation of 400,000 jobs will not solve the unemployment problem. It will be a long time before the transition of our industries to modern technology will overcome that enormous problem.
A main point of the Budget is to create the right atmosphere for a property-owning democracy, for houses and for share-owners. I know that the hon. Member for Rochdale (Mr. Smith) agrees with share owning and share participation by workers in industry. It is important to emphasise what the Chancellor said about maintaining control of public expenditure and, more important, control of inflation, because our entire policy is based on that. The rate of inflation was 18 or 20 per cent. some years ago. It is now about 5 per cent., and the Chancellor must take the credit for that.
With regard to income tax, the Chancellor has placed the emphasis in the right place—that is, on the lower paid and on taking people out of the tax bracket altogether. He has also placed emphasis on small businesses and the help that he can give them. I shall not go into detail, because the Chancellor spelt it out well himself. However, he did not quite bring home the fact that small businesses are hampered not only by the tax system and the number of forms and complications with which they are faced. A one-man business must fill out heaven knows how many forms to complete his tax return. In many cases the forms have no value whatsoever—half of them are duplicated and the other half are consigned to the dustbin. They do not give a small business man the opportunity that he requires. Small business men are being given incentives. We depend on them, because a small business develops into a large business. That is how our whole economy has developed over the years.
I should like to refer to taxation. In the Budget the Chancellor has given us what I have always wanted to see — a move from direct to indirect taxation. Direct taxation is an uneconomic form of tax because it takes a long time to collect and is a laborious process, whereas indirect taxation is far simpler. I welcome the reduction in the threshold, which is very important, and I also pay tribute to my right hon. Friend for being able to add to our reserves.
My right hon. Friend touched on the problem of school leavers. We all know the tragedy. We hope that the scheme that he put forward will enable them to have at least two years' training, but the training that they receive must be in line with technological advances which this country and the whole world see. It is no good putting people into something which is not designed or oriented for the future. It is towards achieving that objective that the Government must put their entire resources and brains.
I was interested in what my hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox) said about pension scares. We heard about all the scares on television, such as taxes on pensions and books. I do not mind the tax on advertisements, which is reasonable. All of us on both sides of the House have suffered from such scares. I believe that my right hon. Friend the Chancellor went a little further than he should have done when he said that there would be no retrospective legislation. He could


not deny those scares and say what he would do in the Budget. I understand that that would be unconstitutional. Nevertheless, we still have such scares, and I am glad that these ones have now been removed.
We want to see the reform and restructuring of industry. We want new industries to be created and small businesses to be encouraged. Above all, we want the tax system to be simplified and reformed to make it easier to collect and beneficial to all concerned. Let us look forward in this platform Budget to seeing this country recover and businesses grow, accompanied by an increase in our standard of living. Let us hope that there will also be a reduction in unemployment, which is the tragedy of the nation.

Mr. Cyril Smith: If I count proper Budgets as opposed to mini-Budgets, I think that this is the 13th budget that I have heard presented in the House. The title that has been given to it is the worst use of the English language that I have heard during all the Budgets that I have listened to. To describe it as a "Budget for jobs" is the greatest joke that I have heard for many a long year. If one examines this "Budget for jobs", what is the Chancellor's solution to the unemployment problem? He said that he was dealing with job creation and, in effect, that he would make it easier for employers to sack people. He said that people would have to work for two years instead of one year before they were entitled to protection from unfair dismissal. Therefore, the first measure that he has introduced to protect jobs makes it easier to sack people.
Secondly, the right hon. Gentleman proposed the abolition of the wages councils. I speak as one of those who are revered by the Government— I have a small business, and I employ 38 people. I must tell the Government, as an employer, that I do not want the wages councils to be abolished, because they protect my business from unfair competition. They ensure that my competitors are required by law to pay the same minimum wage as I do. However, if the wages councils are abolished, the cowboy employers will be able to employ people at ridiculously low wages for about six months, pinch other people's customers and trade, and then disappear. Other people's businesses will decline because they do not have the custom. Therefore, anyone who imagines that wages councils are the enemies of employers, especially small businesses, lives in cloud-cuckoo-land. The abolition of the wages councils will not lead to more jobs. Ultimately, it may lead to fewer jobs because it could mean good businesses going to the wall as a consequence of short-term cowboy activities.
The Chancellor then said that only businesses could create jobs. That is not true if by "businesses" he means private enterprise. Many businesses rely totally on Government finance to purchase goods. There are many examples, such as local authorities purchasing houses and hospital goods. In my part of the country, the water and sewerage systems are desperately in need of renewal. Scores of millions of pounds need to be spent on them. The purchaser is the water authority. If it relies on being financed directly by the water consumer, there is not sufficient capital for the required renewal. The alternative is to inject Government capital so that the Government can purchase capital goods and thereby create jobs.
Therefore, the Chancellor's statement that only businesses can create jobs is not true—if, as I suspect, the right hon. Gentleman means that only private enterprise can create jobs. It is on the section concerning the creation of jobs that I believe the Budget will be judged, in the long term, to have been a failure. Certainly, a £7 million public sector borrowing requirement is too low in the present situation. The Chancellor added that it takes a long time for policies to work and create jobs. He can say that again. The Government have been saying that since 1979. We are now in 1985—I do not know what constitutes a long time in the Government's eyes, hut it must be longer than six years.
There are things in the Budget that one welcomes. It would be a funny Budget if there were not things to welcome. I welcome the extension of the youth training scheme to two years for 16-year-olds, but it is a great tragedy that it is not two years for 17-year-olds as well. We should interpret the word "training" literally and not have tarted-up jobs that are just excuses and palliatives for taking people off the dole. Whether a youngster is 16 or 17 when he goes into the scheme, two years are still required to train him. The figure should not be reduced to one year simply because the youngster is 17. The Government's concept of youth training, demonstrated this afternoon on the basis of two years for one age group and one year for another, shows that they see the YTS not as training but as an excuse for taking people off the dole. If that is the basis of the YTS, it will not do the job that it was meant to do.
I make the following remarks with some irony. The Chancellor said that he would spend about £40 million on creating places for training in engineering. That will come good in the north-west of England and areas serviced by Salford university, a university that created engineering places. Three or four years ago the same Government destroyed hundreds of places at that university, which specialised in engineering. If that represents a U-turn in the Government's programme, it is to be welcomed. It is nonsense for a Government who have destroyed thousands of places in engineering training at universities, polytechnics and so on, to sit there and say that they have created more training places.
I am delighted that the Chancellor had enough sense to leave pensions alone. I suspect it was political sense that moved him, never mind what he said about speculation. I believe that speculation was fuelled so that the Chancellor could see what the reaction would be. When he saw the reaction, especially from his own supporters and Back Benchers, he realised that he would have to back-pedal fast.
I welcome the encouragement to small businesses and the self-employed, but more help could have been engineered for investment for small businesses. There are such things as direct grants, but if the Chancellor cannot provide them he could provide help for small firms through interest-free loans for investment in productive machinery, in tools, in tool making and in modern technology. If those are not possible, the Chancellor might persuade the banks, which get a rake-off every time bank rates rise, to provide two rates of interest on bank loans: one for those investing in productive machinery and another for those who simply want to borrow money for purposes that may in their interests be legitimate but which make no overall contribution to the economy or to industry.
The Chancellor's announcement that the tax on derv is to be increased by 3½p per gallon is serious. During the last six months, the price of a gallon of derv has been increased by 31p. Small hauliers are becoming extremely worried about the constant increase in the price. In the coming weeks the Government will hear more and more about the serious impact this will have upon small haulage contractors. Far from helping to create jobs, it may well destroy them.
Let it be clear that transport is a basic cost of industry. If transport costs to the producer increase, he can only pass them on to the person buying the goods. I am not criticising the increase in the price of petrol, but I certainly criticise the increase in the price of derv. When pressure mounts on the Government, as it will, from the Road Haulage Association, the Government may be persuaded to think again.
Any reduction in tax, whether direct or indirect taxation, is always welcome, but, as the hon. Member for Windsor and Maidenhead (Dr. Glyn) said, we are merely shifting from direct taxation to indirect taxation. In this context, indirect taxation is not merely putting a little on VAT. Let us remember the increases that have been approved even in the past few weeks. The Leader of the Opposition outlined them. The cost of gas and electricity is being increased to give more revenue to the Government and for no other purpose. The industries themselves see no reason to raise their charges, but the Government insist that they be raised. Whatever people save in taxation, they will have to pay in extra charges for gas and electricity.
There is also the increase in prescription charges. That is not just an increase from £1·60 to £2; there are also the items which are being removed from the list and which people will have to pay for in full. Then there are the increases in council house rents, in transport charges and in rates. In many cases, the rate increases have been forced on councils not because the local authorities concerned have increased expenditure by more than the rate of inflation but simply because of the Government's rate-capping policy. The average taxpayer and the average ratepayer have to bear all those increases.
When the Chancellor told us that he was reducing taxation, the national insurance surcharge or whatever, it sounded very good. It is good, taken in isolation, but if it is taken as part of the whole package it is not half so rosy. The reductions in taxation must be seen against the increases in charges for necessary services.
This Budget is like every other Budget—a curate's egg. It is good in parts, but taken as a whole it is far worse than it appears at first sight. Certainly it has been misnamed if it is being called a Budget for jobs. Any effect it has on unemployment will be minimal. As the Leader of the Opposition said, it is a stalemate budget. The country needs a new attitude to unemployment. This Budget does not display it.

Mr. John Stokes: Unlike the hon. Member for Rochdale, (Mr. Smith), I should like to congratulate my right hon. Friend on the felicity of his presentation of the Budget and on his courage and brilliance. The Budget was awaited this year with more than the usual speculation. Most of us received scores of letters from constituents about what it might or might not

contain. Perhaps the nation expects too much of the Budget, because, after all, the salvation of the country depends ultimately upon ourselves as individuals. All that the Government can do is to set the scene to allow us to get on with the job. Therefore, anything that the Chancellor can do to set us free from the shackles of state control is to be welcomed.
This nation, which is so superb and united in war, is not always so good in times of peace and is sometimes inclined even to be divided against itself. In recent years we have certainly become a very difficult country to govern. The present Government, under the dynamic leadership of my right hon. Friend the Prime Minister, are trying to get us all to embrace capitalism more fervently and to allow the market to work more freely, as it does in the United States, where everyone believes in free enterprise and where there is no Socialist party.
We also need more of the nationalism that one finds in some countries on the continent, particularly in France, among all political parties and throughout business. We need to be dragged into the last quarter of the 20th century to compete against the dynamic capitalists of the United States of America, Japan, Germany, France, Taiwan, Korea and so on. We have the brains and trading skills. What we need is the dedication which is so evident in most of our foreign trade rivals. Our business men should be the best men in the country.
I judge the Budget, therefore, against the requirements of that background. In that sense it has been successful. Of course, a great deal more remains to be done. We give such colossal subsidies to so many special interests—farmers, industrialists, students, householders, savers—that it is no wonder that taxation is still so high. Of course, those subsidies cannot be reduced in one year. The reduction must be gradual and there must be the fullest explanation; far more than the Government are sometimes inclined to give us, hence the revolts against the Government by some middle-class supporters. Our working-class supporters are tougher and more loyal. They understand in a fundamental way what the Government are trying to do.
I wanted the Budget to make it easier and cheaper for people to be taken on for work, and some good steps have been taken in that direction. I wanted substantial improvements in the tax lot of the lower paid, who, owing to our idiotic benefit system, are often little better off in work than when receiving state benefits. The Chancellor has gone some way towards doing that. It is probably the most important action that he has taken in the Budget. I should have liked to see stamp duty on house purchase removed to make the redeployment of labour easier. I welcome the reductions in the national insurance contribution from employers and employees. That is most important.
I am sure that my right hon. Friend would have liked to do more, but his room for manoeuvre is strictly limited. He must now guard sterling and be seen to be guarding it. He must keep a tight hold on inflation. He must long, as we all do, for interest rates to come down. That is necessary for industry and commerce, but, alas, the time for that has not yet come. However, there are many good signs. Exports seem to be growing even faster, oil imports will diminish with the ending of the miners' strike, and the contribution of the new and growing service industries is an encouraging sign, although manufacturing recovery is slower than many of us would have wished. My right hon.
Friend has made a most sensible judgment about the size of the borrowing requirement—neither too much nor too little.
Apart from the overall picture of the British economy, which is our main consideration in the Budget, I must also think of the position of my constituency in the west midlands. All hon. Members know that the recession there has been deep. I detect at last some signs of recovery, but it has been slow. The Budget will surely help the west midlands. My constituents are a sturdy lot and seldom complain. The Budget should help industry and employment there, but my constituents know that above all they must help themselves. That means that they must find new technologies, new products, new markets and cheaper ways of making things. The emphasis which for so long in the black country has been on production must now be on marketing and sales.
I listened carefully to the new taxes on those who have company cars. I hope that the tax on the cars used by sales managers and salesmen will not be increased, because they are essential tools of that trade.
We have no frills in the west midlands, and we dislike extravagance. I wish, therefore, that in the Budget we had heard of the demise of more quangos. Has the attempt to curb quangos stopped, or only been postponed?
I welcome the emphasis given in the Budget to training. It is a vital aspect in which this country must catch up with its competitors. I also welcome the further help given to small business and the self-employed. The income tax changes are excellent. They could have been much more had it not been for the cost of the miners' strike; yet, costly as that strike was, it had to be won. We must all now hope for a much better climate of management-union relations in the coal industry and throughout industry.
I believe that there is much more realism on the shop floor about the position in which this country finds itself. In all, I believe that my right hon. Friend has done well in the circumstances in which he found himself. I also believe that we have seen much to look forward to in future Budgets. The country is on the right economic road. The Budget will be well received in all quarters.

Mr. Jim Craigen: I always enjoy the way in which the hon. Member for Halesowen and Stourbridge (Mr. Stokes) wraps himself in the Union Jack, but on this occasion he has even more optimism than I usually associate with him. When I heard the Chancellor say that there is much still to be done, I wondered how long the country could afford the present Chancellor of the Exchequer doing it, because his Budget is no answer to the problems that the United Kingdom faces now or will face in the last quarter of the present century, as the hon. Member for Halesowen and Stourbridge said.
The Chancellor said that the defeat of inflation was still one of his objectives. The Budget can hardly be said to be a triumph for employment prospects in the foreseeable future. The right hon. Member for Old Bexley and Sidcup (Mr. Heath) had great difficulty in keeping a broad grin from his face when the Chancellor spoke about wage restraint and said that it would provide more jobs.
Many of the measures spelt out this afternoon by the Chancellor gave every indication that he intends to dampen down the demand for wage and salary increases and the level of wages and salaries generally and, therefore, the level of purchasing power within the

economy. I thought that the proposal to chop the wages councils — a regulatory system we developed in this country for good reasons—was obnoxious. The low-paid sector of the economy will have the skids put under it with the disappearance of the wages councils. The recent Auld report on Sunday trading referred to the importance of retaining wages councils in the retail sector to preserve stability and to ensure the guarantees that the hon. Member for Rochdale (Mr. Smith) mentioned, because destroying wages councils will not necessarily help industry. It may destabilise the more responsible employers who look for a measure of stability in the running of their affairs, but the absence of regulation can destroy rather than create jobs.
We tend to have more investment and more interest in training employees in higher paid industries because it becomes more worth while. That raises the issue of the two-year youth training scheme. What will it amount to? It is all very well, as the Chancellor did this afternoon, to talk about schools preparing young people for the world of work. One wonders into what world of work they will be inducted. My experience is that schools have more problems from demoralisation and lack of incentive because the young people know only too well the bleak prospects that face them when they leave school
If the youth training scheme is to be financed by the employers, it will be a completely different creature from the present one-year training scheme launched by the Government, the employers and the trade unions under the aegis of the MSC. Employers will expect a great deal more value for money if they are responsible for funding a substantial part of the YTS. The Government should recall the difficulties that they had with employers regarding the levy under the industrial training board system if they are thinking of moving towards a self-financing two-year youth training period.
I remind Treasury Ministers that on a previous occasion we considered the question of a compulsory youth training scheme. When the scheme was originally launched, I recollect that in the Select Committee on Employment we discovered that it would be more bother than it was worth and that it would probably cost more to create a compulsory scheme. We discovered that, for the percentage of youngsters who might opt out of the scheme, it was more worth while to have a voluntary system than to penalise young people who did not opt in.
The Government should have a care lest the expanded youth training scheme envisaged today becomes no more than an extension of compulsory schooling.

Mr. Dave Nellist: Will my hon. Friend confirm that, at the same time as the discussions to which he referred were taking place, a proposal was made by the Department of Employment to reduce the allowance with regard to the YTS to £15 a week? The amount that has been announced in the Budget will go nowhere to restore the allowance to what it would have been following its introduction by the Labour Government in April 1978, taking account of inflation or earnings, which would be £40 a week. The youngsters are already penalised by about £15 a week.

Mr. Craigen: My hon. Friend is right. The Government have been consistently mean-minded about the operation of the training allowance. They have more or less coerced the Manpower Services Commission into


keeping it unfairly low on the ground that, were the allowance to be increased, it would be at the expense of the numbers of trainees. There is no doubt about the significance of the point made by my hon. Friend.
This matter raises once more the whole issue of training. We always seem to think that if only the apprentices were better trained, the economy of the country would be on a better footing. Why do we not start in the boardroom? It is there that the key decisions are made about the value, scope and quality of training. It is interesting that the Treasury is now coming round to abolishing the young workers scheme. I can remember the Minister of State, Department of Employment, conceding that it was 90 per cent. deadweight, which meant that employers would have been taking those youngsters on anyway. The difference was that they were getting a handout in the process.
The Government are coming round to the question of the long-term unemployed and the expansion of the community programme rather late in the day. I remember the predecessor of the present Secretary of State for Employment refusing to increase the number beyond 130,000. It now seems that there are to be another 100,000. There have been recent changes in eligibility for the scheme which are detrimental to married women. Moreover, I suggest that the scheme should avoid some of the bureaucratic red tape which creeps into such special programmes. I prefer to see worthwhile jobs being carried out by local authorities and other sections of the public sector than to have some artificial jobs created simply because they are the only alternative open to the Government.
I listened with interest to the Chancellor's proposals on reform of personal allowances. In my view, it is proper that men and women should be on an equal footing in these matters. With regard to the references to women in the home, I wonder whether this announcement is a precursor of the demise of child benefit, and whether the Treasury in these changes has in mind squeezing out child benefit in the operation of personal allowances.
Reference has also been made to pension funds. Most right hon. and hon. Members were inundated with letters arising from people's understandable fears about their future prospects. Coming at a time when all hon. Members are receiving letters about VAT on books, children's shoes and clothing, it struck me that this was a new form of Budget referendum by post—that we will judge by the volume of correspondence that we receive whether a project is likely to succeed. That was how the Chancellor eventually realised that he would need to keep off the grass with respect to pension funds.
By and large, this has been a Budget of Green Papers. If Green Papers were mentioned once, they were mentioned several times.
The Chancellor with his £2 gallon of petrol will hit some of the small business men about whom he always maintains he is so concerned and some of the rural areas, apart from motorists in general.
Last year and this year we debated the White Paper on public expenditure. We know that the prospects for aiding the construction industry are bleak. No messages of hope for the construction industry were tapped out by the Chancellor at the Dispatch Box. It must not be forgotten that on occasions more than 50 per cent. of the jobs

available in the construction industry depend on public sector contracts, because private firms in the construction industry do not bother to distinguish whether the origin of a contract is public or private. They are interested only in the contract and the work that follows. With regard to the Chancellor's statement about business creating jobs, I remind him that the Treasury has done a great deal as a Luddite in the operation of its fiscal policy to destroy jobs, not least in the construction industry.
When we hear about the overshoot in public expenditure, it should be borne in mind that, with the surge in the dollar, as the Chancellor described it, the Trident programme will be more costly than hitherto envisaged simply because the value of sterling has plummeted.
We constantly hear about the need to contain public expenditure. However, we must ask about the cost of the Falklands programme in relation to public spending programmes generally and the absence of the necessary longer term political initiatives.
I do not think that this Budget will present any great hopes or joys for the prospect of employment or new work. It is another indication that the Chancellor, although he is still on his feet, is on the ropes in the operation of the economy.

Mr. John Browne: I welcome the Budget, and I congratulate my right hon. Friend, in the hope that my right hon. and hon. Friends will pass on my
sentiments.
I do not find it a glamorous or even an exciting Budget, but it is in my opinion very businesslike and interesting. The Budget has far deeper effects upon such matters as employment than almost any critic on either side of the House has yet acknowledged.
It will be borne in upon all hon. Members in time what the Budget is really about. It is about enterprise and the creation of business, and it is about the creation of real jobs —the jobs that I have not heard mentioned so far by its critics. No hon. Member has yet spoken about the creation of real jobs.
It is a significant achievement for our economy, the Chancellor said, and the economy has come through a great test. It has weathered the storm of the worst world recession ever recorded in history and a very worrying world economy.
At the same time, there has been a serious drain, like an open sore, because of the vastly expensive miners' strike. However, in the end it was worth it, because it will result in better industrial relations well into the next century. It is the beginning of the end of the British sickness. The attitudes of both management and employees are changing dramatically as a result of the strike. I applaud my right hon. Friend's resistance of the temptation to fall in line with the normal, traditional, highly popular give-away at Budget time. We must face the reality of the cost of the miners' strike.
The Budget is one for enterprise and real jobs. Some of its aspects, which have been grossly maligned by critics, will encourage enterprise and the creation of employment. We must encourage people to invest in business risk, because when that is successful real jobs are created. The new rules for indexation in the capital gains tax provisions will encourage investment. The allowance for the indexation of losses will encourage business risk that people can stomach. The rising of the thresholds on


capital transfer tax also encourages business investment. The reduction of the retention period to five years on employee purchase schemes encourages inside investors —it encourages employees to invest in their companies, which creates a much better morale within companies.
The simplification of stamp duty reduces the cost of investment and therefore encourages the flow of funds into equity investments. The capital allowance scheme, with 100 per cent. write-off for high technology and short-term assets, encourages specifically and with fine tuning the direction of investment. High technology is the source of future revenue and jobs.
My right hon. Friend mentioned increased integration with the computerisation of the PAYE and benefit schemes. I applaud that, because it will ensure that benefits are paid not to everyone as a right, but to the needy dependent upon their level of need. We must all grasp that.
As the days and months unfold, people will increasingly realise the domestic effects of the Budget as an incentive to employment. The substantial increase in the expenditure and scope of the youth training scheme and the near-doubling in size of the community programme will increase job training. The raising of income tax thresholds will make inroads into the poverty trap and create a real incentive to be employed.
During the six years that I have been in the House, I have asked for a new system of national insurance contributions to lower the cost of employment and increase the incentives to be employed. Therefore, I warmly welcome the graduated scheme announced by my right hon. Friend, although I had hoped that it would be more eroded in total. However, I understand that this Budget must keep the ship on course in difficult waters, and it is not the time to give anything away.
I heartily applaud the measures to reduce the shackles of employment legislation on the incentive to employ. The extension to larger businesses of the rules that now apply to new and smaller businesses is a welcome trend. What is good for smaller businesses is good for business in general. I hope that my right hon. Friend will follow that trend in many other aspects to break down the shackles of employment and planning legislation, first on new businesses and then on business as a whole.
I have always urged a Budget to encourage real employment; we have been lucky in this Budget and I thank my right hon. Friend for that. However, I was disappointed in two specific areas. I heartily support the exclusion of the property category from the business expansion scheme, as its inclusion was a wild abuse. I support the inclusion of research and development companies.
However, my right hon. Friend has not proposed anything to deal with the problem of pool investments. Until the investments in a pool are actually invested in the companies, the rebate does not come through to the end investor. We should encourage small investors to participate in some of the pool investments. The scheme has not sufficiently encouraged start-ups as opposed to investment in businesses and the expansion of businesses. There must be something to encourage people to risk a start-up. It is too easy simply to pour money into an on-going business and obtain the benefits of the scheme. We want the money to go into new businesses—something that we have lacked for the past 40 years.
Secondly, I had asked that household employment should be allowed as a tax charge. That would reduce the black economy and have two huge advantages — it would increase the tax base and reduce unemployment. It would be a cheap investment for the Government.
I wholly support the tight control of the public sector borrowing requirement and the cash limits. However, when my right hon. Friend comes to control public expenditure and make cuts in certain areas, he might consider whether, rather than looking for across-the-board percentage cuts on Government spending, it would be better to go in for something widely mooted in the United States — the practice of zero budgeting, where every programme must be re-evaluated and rejustified with each Budget. The Budget is actually built up rather than simply cut down.
This practice has had beneficial effects in the United States. It has allowed for expansion in some areas and the complete cutting of programmes in other areas. It allows real cuts in spending with the minimum as opposed to the maximum amount of aggravation that usually comes with percentage cuts. That would be a good practice to follow in cutting public expenditure and ensuring value for money.
It is a low-key Budget, but an interesting Budget with fundamental effects upon both enterprise and the creation of real as opposed to unreal jobs.

Mr. Roy Hughes: Yet again we have been told that this is a Budget for jobs. It must be the mark 2 version, because during the 12 months since last year's Budget 143,000 more people have been put on the dole. The Budget contained the usual tax increases—I call them annual increments—on beer, wine, spirits, tobacco and, in a different category, vehicle excise duty. Car tax is to cost another £10 a year, yet cars are no longer a luxury. They are invariably used for journeys to work and for other essential travel. There will be a serious effect on road haulage. Most of our freight is carried by road, so the additional tax on road haulage will increase the cost of goods and services and make our firms less competitive in the markets of the world. Besides, it invariably fuels inflation.
Given the huge amounts already collected by the Government in motor taxation, less than a third of which is spent on roads and road maintenance, it is time that the Government learnt the error of their ways. We are often told of the American example and about how millions of jobs have been created in that country, but one fact that is overlooked is that America has always had a low-cost fuel policy. That has undoubtedly been of tremendous benefit to the American economy.
No one likes paying tax, but cuts in income tax are likely to have only a limited effect in creating new jobs, which allegedly is the Chancellor's aspiration, and, of course, there is always the possibility that, in a day or so, even these minimal decreases could be wiped out if the building societies increased their rates of borrowing.
The changes in national insurance contributions are more welcome. It is suggested that they will make it easier for firms to offer low-paid jobs. In 12 months' time we shall be able to judge whether the Chancellor's proposals will have had a more than marginal effect on the level of unemployment.
The Budget seems to have been drafted in a vacuum. One might think that Britain had only a marginal unemployment problem. The vast size of the problem seems to evade the Chancellor's attention. The chairman of the Conservative party tells us to stop whingeing because we are enjoying a boom. Ministers live in a world of unreality. According to the official statistics, 3·25 million people are out of work. Many thousands more are on training schemes, and thousands do not bother to register for employment because they know that there will be no vacancies for them. In Wales, over 183,000 people are on the dole. That is 17·3 per cent. of the work force, and the figure has risen by more than 10,000 since February 1984. When will the Government give people a little hope?
In the country as a whole, about 1·3 million young people are out of work. Their future is bleak indeed. Admittedly, the Chancellor has extended the training programme. In a sense we welcome that, but there is already some confusion about these matters. The Leader of the Opposition asked this afternoon whether there would be any effect on benefits if youngsters refused to join such courses. That question must be answered.
This year is the International Year of Youth. How sad it is that there should be such massive unemployment among our young people. Is it any wonder that they turn to glue sniffing and football hooliganism? The social and human costs of unemployment are enormous. In Thatcherite Britain the rich get richer, while 15 million live on or near the poverty line.
The National Health Service is being run down at a time when the demands on it are ever increasing. Waiting lists grow ever longer, especially in south Wales, and people are denied the treatment that they need.
Private education is subsidised, while state schools are starved of funds. We see the deplorable spectacle of schools organising bingo sessions in order to buy essential textbooks. The teachers, who play a key role in our society are locked in a major industrial dispute over the poor level of their salaries.
Investment in higher education is essential for the future economic, social and cultural well-being of our country, yet our universities have suffered a 10 per cent.
cut in their funding between 1980–81 and 1984–85. That represents a loss of £460 million of vital resources. During the same period, 30,000 well qualified young people who would normally have been assured of university places have been turned away. That is a waste of ability and talent.
The biggest job is to put our people back to work. The Chancellor should have announced a massive investment programme for the public sector, to improve our industrial efficiency and our environment and to build up our rail and road network. What could be more logical at present than a major housing drive? The materials are largely home-produced. In south Wales our chief housing officers tell us that much of our housing will be fit only for slum clearance by the turn of the century. A large new housing programme, public and private, could take thousands of people out of the dole queue at a stroke.
We all know that there are no easy answers in the attempt to halt Britain's decline, but investment must be a key factor. However, private companies have shifted production and capital overseas to the extent of £50,000 million since 1979. The Government should intervene to stop Britain being undermined in that way. That money should be invested at home.
In the past we have always been told that there is no alternative, yet in recent weeks and months a host of alternative economic packages have been put forward. The Labour party itself has put a major package together. No doubt it will be outlined by the shadow Chancellor in the debate tomorrow afternoon. The CBI has its plan, and so do various journals, such as the Daily Mirror. The former Prime Minister, the right hon. Member for Old Bexley and Sidcup (Mr. Heath) has suggested a £5,000 million package to boost the economy and create jobs. The Government should take notice of people such as the former leader of the Conservative party.
There are alternatives, yet all that we have been given is another dose of monetarism. We need a change of policy. In recent weeks there has been much speculation about the future political career of the Chancellor. This may well be his final Budget. The future well-being of Britain now demands a change of policy and a change of Government.
Debate adjourned—[Mr. Peter Lloyd.]

Debate to be resumed tomorrow.

British Railways Bill (By Order)

Order for Second Reading read.

7 pm

Mr. Patrick McNair-Wilson: I beg to move, That the Bill be now read a Second time.
The Bill is part of the continuing policy of the British Railways Board to achieve more efficiency and better services for its customers. It comes at a time when the highest level of investment for 25 years has been authorised. About £2·5 billion is to be spent over the next five years. Electrification of the east coast main line and the introduction of the new "sprinter" vehicles to replace the old diesel multiples are examples of that improvement in service.
As my hon. Friend the Minister pointed out yesterday in the House, substantial losses have, of course, resulted from the miners' dispute. It is the board's determination not only to make good those losses, but to win back the lost business. The Bill will go some way towards changing the present structure of the board's network to take account of the need for greater efficiency.
I shall point out those parts of the Bill that hon. Members may wish to study. Part I contains mainly the standard provisions that appear in all similar Bills. I refer, for example, to the general provisions in clause 3 that are relevant to railway construction, and to the application of the Compulsory Purchase Act 1965 in clause 4.
Part II contains the most significant early changes and the power to make works. Several works which are outlined in the Bill will have some material benefit for the travelling public. For example, works Nos. 1 and 2 relate to London. Work No. 1, which is outlined in clauses 6 and 7, involves the reinstatement of the railway at Farringdon, which has lain disused since 1969. Using the tunnel at Snow Hill, it will provide a link between the board's midland main line service out of St. Pancras and the board's passenger network south of the Thames. It will ultimately link stations such as Bedford, Luton, St. Albans, Streatham, Croydon, Catford, Bromley, Sevenoaks and Gillingham with an uninterrupted service.
Work No. 2, to which clause 8 relates, involves building a short railway of some 650 m joining the midland main line outside St. Pancras with the east coast main line at the King's Cross freight terminal junction. That will provide direct access for the movement of empty high-speed rolling-stock and will save a great deal of time, fuel and manpower. As it is directly within the board's King's Cross freight complex, it will certainly improve activities there.
Work No. 3 involves the electrification of the east coast main line. I reassure hon. Members that there has been full consultation with the Tyne and Wear county council, and that the scheme has its full approval.
Clauses 16 to 26 relate to the closure of level crossings. They represent part of a continuing programme to provide for more efficiency. If any hon. Members have points to make about individual level crossing closures, I shall endeavour to deal with them later.
Part III is another standard provision dealing with the purchase of land, and rights over land.
Part IV incorporates the provisions of the British Railways (No. 2) Act 1981.
Part V of the Bill, which contains miscellaneous provisions, introduces several quite significant new

proposals. Clause 37 gives British Rail police powers to seek information as to the identity of a vehicle driver involved in offences either at level crossings or within station approaches. That power does not currently exist, and the Bill will bring those officers within the scope of the more general law.
Clause 42 has caused some concern in south Wales, particularly for the right hon. and learned Member for Aberavon (Mr. Morris) and for the hon. Member for Neath (Mr. Coleman). The board proposes to cease to operate a swing-bridge over the River Neath. I should like to set the record straight. The ability to open the bridge was the result of the Rhondda and Swansea Bay Railway Act 1892, and it represented an attempt to provide access along the length of the river from wharves and jetties down past Briton Ferry. However, the swing-bridge facility has hardly been used in recent times. It was used 14 times in 1947, three times in 1948, only once in 1949, and once in 1956, but only for testing purposes, at the request of the Neath harbour commissioners.
The board believes that maintaining the fiction of a swing-bridge that has suffered serious fires, whose dynamos and pumps have been destroyed, and which has been the subject of extensive vandalism over the past, say, 30 years, presents it with a cost that is no longer justified. Many of the wharves and quays have already disappeared, and a road bridge further up the river has already been built on the A474. However, I assure any in the area who are concerned that it will be possible for small craft to pass up river.
Although the river is hardly navigable above the bridge, the clearance available at the bridge will be 5·2 m at high tide and about 10 m at low tide, which should allow any small pleasure craft easy access further up. I know the area well, and I am aware that there is a large sailing marina in Swansea. Those with larger boats may keep them there anyway.
Part VI deals with general provisions, and then there are the schedules.
This modest Bill is part of a continuing process to tidy up the system and to provide better services for passengers. I hope that it will be given a Second Reading. I commend it to the House.

Mr. Christopher Murphy: In contributing briefly to this debate on the Bill, and in considering those items relating to works, I feel that I should begin with a plea to my hon. Friend the Minister to consider the introduction of a Government health warning that "commuting can seriously damage your health", if the recent report from the European Foundation for the Improvement of Living and Working Conditions can be cited in evidence.
British Rail is ever the butt of criticism, whether justified or otherwise, but it is now taken to task—along with other forms of commuting—as the instrument of regular stressful journeys that can lead to hindrance in family relations, leisure activities and job satisfaction. Indeed, travelling to and from work by courtesy of British Rail, which the Bill will facilitate, especially via clause 5, can contribute to everything from sleeplessness and digestive disorders to skin complaints and excessive perspiration—the latter no doubt the consequence of the


"Will she come, won't she come" syndrome, well recognised by would-be travellers hopping up and down on station platforms wondering whether a train will arrive.
It may already be evident from my opening remarks that I view the Bill with a mixture of support and circumspection, especially as I represent a constituency in Hertfordshire which has a great many regular rail commuters. My support comes for the evident improvements that will be made to the services of British Rail if this measure is passed by Parliament. My circumspection comes in consequence of the omissions from part II of additional improvements which would be of value to my constituents in Welwyn Hatfield.
The purpose of the Bill primarily is to empower the board, as it states,
to construct works and to purchase or use land.
However, no mention is made of the long-awaited redevelopment project at Welwyn Garden City station, nor of the possibility of creating a new station at Welham Green, for which I and many local people have been campaigning. But mention is made in clause 5 of works to be carried out in terms of the railway at King's Cross, which is the terminus for the eastern region line from the north, on which are the four stations in my constituency. The other three stations are Brookmans Park, Welwyn North and Hatfield, the last mentioned having been, with its staff, a recent award winner.
Although the Bill could not be expected to cover all aspects of the inner suburban electric service, given the long title to the measure, it might be appropriate simply to mention that, despite the new rolling stock and revised timetabling, a number of difficulties unfortunately still exist. Nevertheless, it would be equally appropriate when considering the Bill, in particular part II, to mention that local people, whether travelling to King's Cross or to Moorgate, or, indeed, even further afield, have much benefited from a faster and more efficient service, albeit not a cheaper one. Commuter tax relief, which I have long sought, would have been a welcome addition to today's Budget statement by the Chancellor.
On balance, it is my intention to support the Second Reading of the Bill tonight because of the importance of clause 5 and other aspects for hon. Members and their constituents, but I would make one plea. When hon. Members travel the length of Welwyn Hatfield as they come or go to or from their constituencies at high speed by rail, especially if they are enjoying the advantages of the 125 train, and cross the noticeable landmark of Digswell viaduct and get a brief glimpse of mid-Hertfordshire's towns and countryside, perhaps they will spare a thought for our extra needs. Then hopefully on the next occasion they will equally be prepared to support a further British Railways Bill relating to works designed to provide those additional and necessary improvements for my local commuters.

Mr. Peter Snape: The House will be grateful to the hon. Member for New Forest (Mr. McNair-Wilson) for the customarily succinct manner in which he has performed the annual ritual of moving the British Railways Bill. My remarks will be exceedingly brief because, as the hon. Member indicated, there is nothing in the Bill which could be regarded as

controversial, although the hon. Member for Welwyn Hatfield (Mr. Murphy) managed to strike a suitably parochial note, not only by making a plea on behalf of his constituents, as we would expect from him, but by providing the Welwyn and Hatfield "Bugle", or whatever the weekly organ is known as, with a line or two that will interest his electors whenever that newspaper is printed.
I hope the hon. Member will not feel that I am being unduly combative if I say that the service which his constituents enjoy, both to King's Cross and to Moorgate, would be welcomed by millions of people throughout the length and breadth of the country. Although there have inevitably been teething troubles on that route, I hope that the hon. Member will agree that now that it has settled down it is far superior to probably seven eighths of British Rail's commuter network. I hope that both the hon. Member and his constituents feel that British Rail has made a very good investment in improving communications in that part of the country.
I welcome in particular the clause which deals with the Snow Hill link. I, like the hon. Member for Welwyn Hatfield, shall sound a somewhat parochial note by saying that although I welcome the clause, I believe, since I represent a midlands constituency, that it is the wrong Snow Hill with which it deals. Unfortunately, the grandeur of the Great Western Railway at the former Snow Hill station has not yet been restored. Although provision was made for such works in the last British Railways Bill, I understand that there has been a hold-up.
Those of us who view the centre of Birmingham with a somewhat jaundiced eye believe that the bomb site appearance of the former Snow Hill station ought to be dealt with sooner rather than later and that the work for which parliamentary permission was given this time last year ought to be commenced. I hope that the Minister will be able to give an assurance that the delay will not be due to the fact that inevitably these decisions will now have to be taken by the Department of Transport because of the regrettable demise, if the Government have their way, of the West Midlands county council.
On the clause that mentions the Snow Hill link with London, one of the regrettable legacies that our railway system has inherited is the unbridled competition that took place 100 or 150 years ago between the railway companies. In modern transport terms, that competition has resulted in journeys all too often commencing and terminating in the wrong place. The Snow Hill link will create through services between the southern and London midlands regions via Blackfriars and Farringdon. Once the link is opened, the hon. Gentleman's constituents will be able to travel in the same train as far as Sevenoaks, Chatham or East Croydon, or even further than that. I hope that when the scheme comes to fruition he will be led to praise at least some aspects of British Rail's management.
Clause 33 gives a time extension to the Windsor link, as it is known, in Manchester. It deals with the Castlefield curve. The House has welcomed this clause in the past. Therefore, it appears to be about time that British Rail stopped talking about the need to connect two former competitors—the old Lancashire and Yorkshire Railway and the London and North Western Railway—and got on with the job.
On behalf of the Opposition, I give a qualified welcome to the Bill. We hope that the works contained therein will


be completed before this time next year. Much though we enjoy listening to the hon. Member for New Forest, we should hate him to have to repeat himself.

The Parliamentary Under-Secretary of State for Transport (Mr. David Mitchell): It may be helpful if at this point I intervene to give a brief indication of the Government's view on the Bill. With the knowledge that you yourself, Mr. Deputy Speaker, represent a railway town and have a very special interest in it, I am sure that you will be following the debate with keen interest.
My hon. Friend the Member for New Forest (Mr. McNair-Wilson) has shown his usual lucid mastery of the purposes of the British Railways Bill. The House should be grateful to him for the way in which he went through it. My hon. Friend the Member for Welwyn Hatfield (Mr. Murphy) put the case for the improvement of station facilities in his constituency with great diligence on behalf of his constituents. These matters would, I believe, best be raised by him direct with British Rail. I am sure that if he writes to the chairman his letter will receive careful attention.
The hon. Member for West Bromwich, East (Mr. Snape) claimed that because of the way that the railways started, many journeys do not begin or end where people would like. That is another illustration of the constancy of change in the market for transport. When the Transport Bill returns to the Floor of the House, I shall look for the hon. Gentleman's obvious support.

Mr. Snape: I know that the hon. Gentleman does not intend to introduce a controversial note, and before he does so he should reflect that the Opposition are interested in ensuring that there is transport where people want to go. We fear that the deregulation Bill will be a debussing Bill and destroy the system altogether.

Mr. Mitchell: I shall not pursue the hon. Gentleman on that matter on this occasion. I am sure there will be happy opportunities for hunting him in future.
The Government have considered the Bill and have no objection in principle to the powers sought by the board. A few minor points have been raised with the Bill's promoters in correspondence, but I have no reason to doubt that these will be satisfactorily cleared up. A petition has been deposited by London Regional Transport, but I understand that BR and LRT expect to resolve this matter before the Bill reaches Committee. Therefore, I recommend to the House that the Bill be given a Second Reading to allow it to proceed in the usual way to Committee where its provisions can be considered in detail.

Mr. Patrick McNair-Wilson: rose——

Mr. Deputy Speaker (Mr. Harold Walker): Order. With the leave of the House, the hon. Member may speak again.

Mr. McNair-Wilson: May I elaborate on a point made by the hon. Member for West Bromwich, East (Mr. Snape) about clause 33? He is right to say that when work No. 2 was authorised in 1980 it was regarded as subordinate to the main work in the Act, the Castlefield curve, to which he referred. For various reasons with which we are now familiar that curve has never been built and the proposal has now been abandoned. However, the board still sees a good case for retaining the powers for work No. 2, as that will enable the junction between the Liverpool and Bolton lines at Salford junction to be simplified as part of a scheme for track rationalisation in connection with the construction of the Windsor link, as it is known, which is still planned to go ahead. I hope that that reassures the hon. Gentleman.
The comments of my hon. Friend the Member for Welwyn Hatfield (Mr. Murphy) will, I have no doubt, be noted by the board.

Question put and agreed to.

Bill accordingly read a Second time, and committed.

Cambridge City Council Bill (By Order)

Order for Second Reading read.

Mr. Robert Rhodes James: I beg to move, That the Bill be now read a Second time.
The Bill is promoted by the Cambridge city council, Cambridge being the finest city in Britain, having the best university in the world and being not ill-represented in the House. It has a Labour council, but the Bill has the full support of all parties.
The Bill's purpose is primarily to preserve by reenactment in contemporary form certain existing local Act powers which were inherited under the Local Government Act 1972. I should be happy to answer any questions that hon. Members may pose.
Let me specifically refer to clause 6, which declares, for those who know Cambridge, Jesus Green to be a common and deems it to have been registered under the Commons Registration Act 1965. That has caused some concern in my constituency, but it is intended that the original common rights will be specified in an agreed amendment to be submitted in Committee.
I commend the Bill most warmly to the House.

Sir Anthony Grant: I intervene only briefly because one of the effects of the depradations of the previous Boundary Commission was to include part of the city of Cambridge, two wards to be precise — Trumpington and Queen Edith — in my constituency. That gave me two advantages—first, of

representing an agreeable part of the city, and, secondly, of having the good fortune to be a neighbour of my hon. Friend the Member for Cambridge (Mr. Rhodes James). Not only is he the most distinguished historian in the House, but he is a most noted academic. My hon. Friend, a fellow of All Souls, is a remarkable constituency Member. Nobody pleads the cause of Cambridge better than he does.
Therefore, I am delighted to say that this modest measure will be of advantage to my constituents who live on the fringe and who enjoy the benefits of what my hon. Friend has rightly described as the most beautiful and successful university city in Britain, if not the world. It is non-controversial and I sincerely hope that it will reach the statute book.

The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane): I endorse many of the comments made by my hon. Friends the Members for Cambridge (Mr. Rhodes James) and for Cambridgeshire, South-West (Sir A. Grant). It may be convenient for me to intervene briefly to give the Government's view of the Bill.
The Government have considered the Bill and have no objection to the powers sought by the council. Neither my Department nor that of my right hon. Friend the Secretary of State for Transport have any observations on the Bill. Therefore, I recommend to the House that the Bill be given a Second Reading and allowed to proceed in the usual way to Committee, where its provisions can be considered in detail.

Question put and agreed to.

Bill accordingly read a Second time, and committed.

C-Poultry Company Limited Bill (By Order)

Order for Second Reading read.

Mr. Robert Rhodes James: I beg to move, That the Bill be now read a Second time.

The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane): The Bill falls mainly within the purview of my right hon. Friend the Secretary of State for Trade and Industry. He has no objection in principle to the powers being sought by the promoters of the Bill. He has raised a few minor points on the Bill which are under discussion with the promoters. I recommend to the House that the Bill be given a Second Reading so that its provisions can be considered in detail in Committee.

Question put and agreed to.

Bill accordingly read a Second time, and referred to the Examiners of Petitions for Private Bills.

Harrogate Stray Bill (By Order)

Order for Second reading read.

Mr. Robert Banks: I beg to move, That the Bill be now read a Second time.
The stray is an invaluable and unique asset to Harrogate. It is a central feature of the town's character, just as Hyde park is a feature of London's. The stray has been jealously guarded down the years and the Bill is to preserve its protection. It wraps around the centre of the town like a vast village green of some 200 acres, and the subsequent development of Harrogate owes much to the great Act of 1770—the Forest of Knaresborough Act— which set out to preserve the open walks which had become an essential feature of the spa. It said:
persons resorting to the said waters have always had the benefit of taking the air upon the open parts of the Forest".

The forest disappeared, leaving wide open spaces, but today it is enhanced by trees that have been planted over the years and the remarkable number of crocuses which provide a carpet of colour at this time of year. During the second world war, the stray took on a different use when it was dug up to grow potatoes and vegetables.
In 1792, Dr. Gamett praised both the chalbeate and sulphur waters, "the latter highly esteemed" and the "lively bracing air", not forgetting the "sociability of the company" and
the many pleasing and delightful scenes of the district".
The growth of the spa was a consequence of private and public enterprise in harness. Similarly today, Harrogate is once again profiting from its role in the growing leisure and conference business and the wealth that we derive from it.
Local doctors, Bain and Edgecombe, argued at the turn of the century that the bracing climate alone was an effective treatment for two conditions:
the physical and mental depression resulting from town life and sedentary occupation",
and, secondly,
that state of brain fag which is the result of prolonged and assiduous mental work without a break".
You will understand, Mr. Deputy Speaker, how much I value my weekends and recesses in my constituency. The importance of the stray for recreation cannot be over-emphasised.
The Bill is promoted by the Harrogate borough council. The Local Government Act 1972 provided that with certain exceptions local legislation promoted by local authorities prior to reorganisation should cease. By subsequent order, the cessation date for such legislation in non-metropolitan areas is 1986.
The Act of 1770 directed that the stray be set out as stinted pasture for the benefit and use of the freeholders and copyholders of Harrogate. The Act also directed that the land should thenceforward for ever remain open and unenclosed. By the Harrogate Corporation Act 1893 the powers of control and management of the stray were vested in the corporation of Harrogate, the freehold of the land remaining vested in the Duchy of Lancaster, having been part of the forest of Knaresborough of which His Majesty King George III was seized.
The borough council has management powers over the stray and there are nowadays no individual rights of


common over the stray. Section 10 of the Harrogate Corporation Act 1893, from which clause 5 of the Bill is principally imported, provides:
The corporation shall (except as in this Act otherwise provided) at all times keep the Stray uninclosed and unbuilt on as an open space for the recreation and enjoyment of the public.
Throughout its history, the stray has been widely used by the residents of Harrogate, both individually and in organised groups and teams, for many forms of recreational activity. Those activities include walking, running, picnicking, riding, soccer, rugby, grass-track cycle racing, golf, athletics and polo. Additionally, the stray is a focal point for school activities, events organised by various local and national charities, rallies, exhibitions, festivals, the town bonfire, fairs and circuses. The use of the stray for organised group games and events is subject to the permission of the council.
Being situated in the centre of Harrogate, the stray, particularly during the summer months, is used extensively by, for example, those working in offices nearby who seek a breath of fresh air during their lunch hour. It is vital to preserve its status as open parkland for the free enjoyment of the many residents and visitors to Harrogate.
Most of the Bill is a re-enactment of existing powers, but showing deference to recent common land precedents in local legislation. The management of the stray is maintained in the borough council, which has a duty to maintain the stray and the wells upon it, subject to certain powers to inclose. The powers are contained in clauses 4 and 6 of the Bill.
The new powers are the following: first, to inclose for helicopter landings; secondly, to build new public conveniences — which, incidentally, have already been constructed — and changing rooms on the stray in specified plots. Thirdly, in accordance with approved departmental policy, opportunity has been taken by the promotion of the Bill expressly to repeal relevant provisions which are considered to be redundant.
The borough carried out consultations with the Stray Defence Association and other organisations and individuals. General support for the Bill has now been universally given and full support has come from the Ramblers Association.
A number of constituents have raised important points with me and I am fully satisfied that all representations have been considered. In particular, it was originally proposed to repeal the legislation making provision for water from the wells to be supplied without charge for the public drinking fountain situated outside the royal pump room. The fountain was originally provided in view of the earlier obligation for a free supply of water to be made available from the well inside the royal pump room. I am happy to say that this Bill now incorporates this obligation and perpetuates the only surviving link with Harrogate's great past as a spa.
Local concern was expressed under the following headings: in relation to the stray, over road inprovements and the landing of helicopters; in relation to repeals of sections of earlier Acts, including sections under which low-cost or fine water is supplied to certain landowners in

the borough, to alleged interference with piling rights, especially through the repeal of a provision restricting boating on Lumley reservoir, and to the repeal of a provision under which a particular landowner has the right to construct a road over part of the stray.
In relation to repeals, the borough council complied with Standing Orders of the House in giving notice of the intended repeal to those in whom the benefit of protective provisions was vested.
Five petitions were deposited against the Bill, by the Harrogate Society, by a company and by a number of individuals. Negotiations or correspondence have taken place with each of the petitioners through parliamentary agents and a measure of agreement now exists between the parties. Draft undertakings sent to the petitioners have been endorsed by the borough council in return for the withdrawal of the petitions and it has undertaken to amend the Bill so as, first, to provide that land taken elsewhere in the borough as a substitute for any part of the stray used for road or path making improvements shall be no more than 100 m away from the stray border as delineated in the stray plan; secondly, to limit the number of temporary enclosures for the purpose of aircraft landings to 12 in any given year; thirdly, to save from repeal paragraphs 2 and 10 of section 11 of the Harrogate Waterworks Act 1897, relating to water supplies from Scargill reservoir and other matters section 23 of the Harrogate Corporation Act 1893, relating to land in Granby park area, and section 25 of the Ripon Corporation Act, relating to sporting rights.
The promoters have agreed to introduce a new Bill to regulate Bogs field, and I wish to put this on the record. Bogs field was not included in the present Bill, because the council considered that, although historically it may have been part of the stray, it was different from the stray in topography, use and land ownership—the borough council owns the freehold. However, the borough council now accepts that statutory restrictions on its use and management should be enacted.
The House can derive the satisfaction that I feel that this vital part of the heritage and environment of Harrogate will, with the passage of this Bill, be preserved. I am indeed conscious of the desire of the members and officers of the Harrogate borough council to perform their functions in the full spirit of this necessary preservation.

The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane): This Bill is generally acceptable to us. My Department and that of my right hon. Friend the Secretary of State for Transport have a few minor reservations, which we are discussing with the promoters. There are a number of petitioners against the Bill and they will have a chance to present their objections to the Select Committee, which will be in a much better position than we are tonight to examine the provisions involved and will have the added benefit of expert evidence.
I hope that the House will give the Bill a Second Reading and send it to Committee.

Question put and agreed to.

Bill accordingly read a Second time and referred to the Examiners of Petitions for Private Bills.

Plymouth Marine Events Base Bill (By Order)

Order for Second Reading read.

Miss Janet Fookes: I beg to move, That the Bill be now read a Second Time.
Plymouth is justly famous for its long association with ships and the sea, with daring voyages of exploration and in naval terms as well, and it currently houses a major naval base, but it has also become famous over the years for recreation sailing and international competitions.
The present Bill seeks to have a marine events centre. It is soundly based and is a co-operative venture between Plymouth city council and a private firm, Dean and Dyball. We are urgently in need of this centre to provide all the facilities that are required for international yachting races and for lesser but none the less important activities. I believe that, once established, it will revitalise the area of Coxside in which it is situated and give great opportunities for employment, as well as being an additional recreational facility for the city of Plymouth.
I believe that the Bill is soundly based, and I warmly commend it to the House.

The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane): My right hon. Friend the Secretary of State for Transport's Department has raised a few minor points which are under discussion with the promoters, but I hope that the House will give the Bill a Second Reading and send it to Committee.

Question put and agreed to.

Bill accordingly read a Second Time and referred to the Examiners of Petitions for Private Bills.

Scarborough Borough Council Bill (By Order)

Order for Second Reading read.

Sir Michael Shaw: I beg to move, That the Bill be now read a Second time.
This Bill has been promoted by the Scarborough borough council. The House will recollect that the Local Government Act 1972 provided that, with certain exceptions, local legislation promoted by local authorities prior to reorganisation should cease. By subsequent order, the cessation date for such legislation in non-metropolitan areas is 1986. The purpose of the Bill is to continue the authority and power which the corporation has always had to continue it into the future.
The Bill relates entirely to cliff railways or lifts at Scarborough and Whitby. The Whitby lift is at present operated under statutory provision under the Whitby Order 1914. The Scarborough railways are at present operated under section 24 of the Scarborough Corporation Act 1925. The Bill continues legal powers for the lift and the railways. It does this by express enactment. The Bill does not authorise the construction of new lifts or railways.
These lifts and railways are important both to Scarborough and to Whitby since much of their trade is based on tourism and both towns have steep cliffs leading down to the beach. These lifts are, of course, of great assistance to visitors to the two towns. In addition, the Scarborough railway forms a vital link between the town, the conference hotels and the spa, which has recently been refurbished at a cost of well over £5 million.
No petitions have been deposited against the Bill and I hope that it will be approved by the House.

The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane): We have no objection to the Bill. I hope that the House will give it a Second Reading and permit it to go into Committee as quickly as possible.

Question put and agreed to.

Bill accordingly read a Second time and committed.

Streatham Park Cemetery Bill (By Order)

Order for Second Reading read.

Mrs. Angela Rumbold: I beg to move, That the Bill be now read a Second time.
The purpose of the Bill is to authorise the promoters, the Great Southern Cemetery and Crematorium Company Ltd., to make surplus cemetery land available for development purposes appropriate to the local community. The promoting company was incorporated in 1907 and its business consists of maintaining cemeteries and operating crematoria.
Among the cemeteries belonging to the company is the Streatham Park cemetery, which is in my constituency, where it also has a crematorium. Owing to the increasing use of cremation for the disposal of human remains, there is more land available to the promoters at this cemetery than will be required by them for burials.
The Bill is required since the lands for which power to develop is sought had technically been set aside for the burial of human remains and therefore come within the scope of the Disused Burial Grounds Act 1884. Parliamentary sanction must therefore be obtained to remove the application of that Act to the lands. In addition, parliamentary sanction is required to remove the effects of consecration in respect of part of the lands which have been consecrated, though never used, for the burial of human remains.
If the Bill is enacted and if the company decides to develop or sell the lands, it will still be necessary for the company to obtain planning permission from the local authority, the London borough of Merton, in the usual way.
It is not proposed to release any part of the development profits or proceeds of sale to the shareholders but to plough such funds back into the company. The company adopts a rolling capital improvement programme at Streatham Park cemetery and has already spent over £100,000 on major improvements, such as lawn clearance schemes, with considerable benefit to its appearance, and is scheduled to spend a further £96,000 on similar projects over the next two years.
Under clause 3—"Power to sell or develop scheduled lands"—the promoting company is given power to sell or develop the scheduled lands. By clause 4 — "Discharge of trusts" — the scheduled lands are to be freed from the effects of Disused Burial Grounds Act and, so far as the consecrated land is concerned, from the effects of consecration. Clause 5 — "Power to use scheduled lands for other purposes" — enables the

scheduled lands to be used for any purposes as if they had never formed part of a cemetery. Clause 6—"Removal of human remains"—contains a code for the removal of human remains and has been included as a precaution because, to the knowledge of the promoters, the scheduled lands have never been used for burials.
Although no formal objections have been lodged by any outside sources to the Bill, considerable concern exists among the residents of Mitcham about some aspects of the measure, arising from an experience in 1971. Therefore, when the Bill is in Committee, I hope that hon. Members will be asked to look carefully, on behalf of my constituents, at clause 4 and at the second schedule, which refer basically to unconsecrated land.
I particularly ask for those provisions to be examined carefully because the disposal of human remains is a sensitive matter. Many of the relatives of my constituents have been buried there. My constituents are concerned because if the lands go for development, the possibility might arise that all the remains had not been removed within the context of the Bill. I hope, therefore, that in Committee the promoters will be questioned closely about that and asked to provide undertakings to assure my constituents that no part of the land which will be used for development purposes might still contain remains or that remains might emerge during the course of development.
The House will appreciate that that would, were it to happen, cause immense distress to my constituents, remembering that, as I said, few matters are so sensitive as the disposal of human remains. I make that important reservation about the Bill on behalf of my constituents.
The schedule to the Bill contains a description of the lands affected by the Bill, and a plan showing the lands has been deposited in the offices of the Clerk of the Parliaments and in the Private Bill Office of this House.
The passing of the Bill is the only means by which the promoters may make use of the lands which are surplus to their requirements as regards the burial of human remains for the benefit of the local community.
I reiterate that, if the Bill is to be for the benefit of the local community, the residents must be assured that there will be no impediment from their point of view to the disposal of human remains. With those reservations, I commend the measure.

The Parliamentary Under-Secretary of State for the Environment (Mr. Neil Macfarlane): The Government hope that the Bill is acceptable now to the House, will be given a Second Reading and may be allowed to proceed in the usual way to Committee.

Question put and agreed to.

Bill accordingly read a Second time and referred to the Examiners of Petitions for Private Bills.

Sewers and Surface Drainage (Wales)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Durant.]

Mr. Gareth Wardell: I am grateful for this opportunity to outline the problems associated with the non-adoption of sewers and surface drainage infrastructure in Wales.
I first became aware of the problems of unadopted sewers in 1983. Until then, like most people, I thought of sewers only rarely, and then only in the vaguest terms as rather unsavoury topics. I have found, however, that sewers are just like the underpayment of DHSS benefits, the non-repair of rented property, breaches of the sale of goods legislation and many other problems about which people think that they have rights and are protected against financial loss when, in fact, they are not.
The problems associated with unadopted and unadoptable sewers stem from 1981, when the now defunct National Water Council published a design and construction guide entitled, "Sewers for Adoption." The standards and requirements in that guide have now become the standards and requirements for sewers to be adopted by regional water authorities under sections 17 and 18 of the Public Health Act 1936.
However those standards do not coincide with those laid down by the 1965 building regulations, which are administered by local authorities and which form the legal requirements for the construction of sewers. The two standards do not coincide because, while the building regulations meet health and safety standards, they do not incorporate the wider view relating to the standards of construction of the network as a whole.
The regional water authorities are obliged by law to take wider considerations into account when sewers are to be adopted and maintained at public expense. In other words, the water authority criteria are higher. While the building regulations are statutory, compliance with water authority standards is not.
Too often, the developer selects the cheapest and most convenient construction route—through private gardens, for example. Unfortunately, the potential house buyer—a totally innocent party—suffers because the sewers will never be adopted by the regional water authority. They are, in effect, unadoptable because they do not meet the "Sewers for Adoption" criteria. They will remain private sewers, for which the house buyer and future buyers will be legally and financially responsible for maintenance and repair.
An example of that is now occurring at Gowerton, in my constituency, where a developer has recently been granted outline planning permission on what was an application for 112 houses, although there will now be fewer than that number. So far, the developer has not offered to enter into a voluntary agreement under section 18 of the Public Health Act 1936. It has been pointed out to the developer that, if he carries out his plans to lay the sewers of the estate on private land rather than alongside the access road, as requested by the Welsh water authority and the local authority, the sewers will not meet the "Sewers for Adoption" criteria. No matter what compromise is reached regarding diameter of pipe laying at the detailed planning stage, those sewers on that private estate will never be adopted. The developer rightly points

out that he is meeting all his legal requirements, but it remains a fact that future home buyers on that estate will have to pay for the short-sighted objective of the developer. In that way we are storing up problems for the future.
The Welsh water authority estimates that in Wales 16,000 homes with sewers will not be eligible for adoption. In Lliw valley, which serves part of my constituency, approximately 2,800 houses have unadopted sewers. Householders are particularly angry when they encounter this problem, because they believe, not unreasonably, that throughout the stages of house buying they are protected from it.
The house buyer notes from the estate agent's literature whether the house in which he is interested has a "public" or "private" drainage system. If he has what is described in this literature as a "private" drainage system, that relates to a cesspit or septic tank, and the price of the property often reflects the fact that the householder is responsible for the maintenance of the private system. However, if the estate agent's literature says "mains drainage," the house buyer is normally satisfied that no further questions need to be asked. Yet he may be taking on a shared responsibility for a system where far more expense can be incurred than in maintaining cesspit drainage, where the most that is usually required is replacing a pipe from the back of the house to the bottom of the garden.
The house of one of my constituents, for example, is showing all the ugly signs of subsidence. Investigations are not yet complete, but it appears from the preliminary report than an unadopted and uncharted sewer pipe from a private housing estate of 30 houses comes across the field and under his house. The pipe is broken at that point and sewage is leaking into the clay on which the house foundations lie. I cannot yet state the legal and financial implications for my constituent and the others on the estate, but that sewer will have to be re-routed at the expense of the householders on that estate.
If the system is defective at that point, it is not likely to be in good repair elsewhere. The householder will not be eligible for legal aid, even if he can seek redress from his solicitor or surveyor, or the local authority or water authority, none of which apparently was able to state the position.
What are the implications for the building society which has an interest in the value of the property and in the householder's ability to meet repayments? What are the implications for the insurance company, if the householder is covered? That is the legal and financial morass that the present position poses for consumers.
If the house buyer employs a surveyor and valuer to inspect his property before purchase, unless the property is showing signs of flooding or affecting foundations, there is no way in which a surveyor can assess or comment on the state of the sewer. The same applies to a building society surveyor. Even on new developments, sewers are normally in place and covered before house construction. It would therefore be impractical and unreasonable to expect to extend the scope of such reports to cover the adequacy of a sewerage system, but that again means that the buyer is not protected when he thinks he is and has paid fees to ensure that he is protected.
Similarly, when a home buyer pays a substantial fee for conveyancing on his property, he expects that any aspect of his purchase which could result in his incurring an unexpected expense of thousands of pounds or could affect


the subsequent value of his investment would be pointed out to him by his solicitor. I understand, however, that it is not possible for a solicitor to provide this information and protection. A local authority can inform a solicitor whether the sewer is adopted and whether a section 18 agreement will take effect, but it cannot say, without the regional water authority undertaking a survey, whether an unadopted sewer system will be adopted under section 17. The standard form for solicitors' searches which is sent to local authorities does not ask whether the regional water authority has refused an application to adopt.
Some of my constituents are new residents on an estate in Clydach where 300 houses are served by an unadopted sewerage system. Those new residents could not have been informed by their solicitors, or the local authority —neither of which knew about this—that the residents on the estate were applying for the sewers to be adopted. The residents will jointly have to pay, first, for a detailed camera survey of the sewers and then for any repairs, reconstruction or re-routeing necessary to comply with water authority standards for adoption.
Some of those houses are 30 years old; others are new. How should the costs of adoption be apportioned —equally, on age of property or on length of residence? The whole matter is potentially a legal minefield, yet it could not be covered by solicitors' searches which the householder thinks cover him for such disastrous contingencies. We are talking of hundreds of thousands of pounds.
Presumably, it was awareness of that that led the Secretary of State for Wales to overrule the Welsh water authority, Dwyfor district council and a public inquiry inspector, and to order the Welsh water authority to adopt the private sewers on the Maes Gerddi estate at Porthmadog. To repair those sewers will cost the Welsh water authority an estimated £200,000. I am delighted that the residents of the estate, who are responsible for the sewers, will not have to meet those costs, but I shall expect exactly the same consideration to be given to my constituents as, I am sure, will all Members on both sides of the House. If it is right for Wales, my English colleagues will want equal treatment.
We must return to the root of the problem — the discrepancies between the building regulations and the 1981 "Sewers for Adoption" criteria, and the implications of that for sections 17 and 18 agreements. To give people the protection to which they are entitled, first, the voluntary status of section 18 must end, and, secondly, sewers must be constructed to adoptable standards, which means the regional water authority standards.
New legislation should provide that a person constructing a sewer should build it so as to comply with the building regulations and with any higher standards necessary to comply with the adoption standards of the regional water authority, and make provision, pending adoption, by way of a deposit or bond.
Such a measure, which would close the gap between building regulations and regional water authority adoption criteria, has virtually the unanimous support of regional water authorities and local authorities. The Principality Building Society and other building societies, the Building Societies Association and the Law Society are firmly behind that suggestion.
The Association of District Councils, whose members, as planning authorities, are placed in a most invidious position, has been pressing for that change since 1982, as has the Building Societies' Association. At that time, the Secretary of State for the Environment deflected those representations by saying that pressure would be brought to bear on developers to construct sewers to adoptable standards. Informal pressure and voluntary section 18 agreements have not worked. As my constituents know, developers continue to opt for the cheapest method of construction. I hope that the Minister realises that I shall not be fobbed off with that sort of reassurance tonight. Voluntary agreements have not worked. Meanwhile, we are continuing to store up tremendous and expensive problems for the future.
I am aware that such a simple step will not resolve all the problems at a stroke. First, there will be instances of new sewers being connected to existing systems not complying with the adoption criteria. In 1936, with the introduction of the Public Health Act, a blanket adoption was given to existing public sewers. A similar solution was applied in Scotland under the 1968 Act when it was applied in 1973. However, a much more recent precedent for releasing home owners from the unknown financial implications of inadequate construction is the Housing Defects Act 1984. I see no sound or just reason why unadopted sewers should not be regarded in the same way as houses in that Act, especially as the Government should have been able to predict the problems inherent in the water councils' higher adoption standards not coinciding with the building regulations.
Secondly, a developer may feel that the regional water authority conditions are unacceptably stringent, or that a bond or deposit requirement is unnecessarily high for a particular development. It would therefore be both sensible and practical to incorporate a right of appeal into the mandatory requirement. That would help the construction industry, which is labour-intensive. As the right of appeal is already a provision of section 17, the decline in those appeals should allow for a new provision, without an increase in administration costs or building costs associated with delay.
Similarly, as water authorities are already consulted about planning applications, regardless of whether a section 18 agreement is being considered by a developer, I cannot see that mandatory section 18 agreements with the right of appeal would increase the administrative costs of regional water authorities. The procedure would be far more cost effective for the public. Indeed, the whole thrust of this call for legislation is in the public interest.
I am sure that this issue will not stimulate the same interest as the economic statement of the Chancellor of the Exchequer earlier today, but for those people in homes with unadopted sewers, the need for change is just as important. When my constituents and other people buy houses and incur considerable expense in surveys and solicitors' fees, they think that they are protected from disaster. They are not, if they or their neighbour has unadopted and unadoptable sewers. Therefore, I urge the Minister, on behalf of the people of Wales, to take up this issue and to persuade his right hon. Friend the Secretary of State for Wales to introduce legislation to ensure that home buyers are given that protection which, as consumers, they have a right to expect and to which they are entitled.

The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts): I must first congratulate the hon. Member for Gower (Mr. Wardell) on his lucid and well-informed speech about the difficulties which can arise when foul and surface water sewers are not adopted. It is fortunate that the number of unadopted sewers which cause serious problems are few, but, nevertheless, when problems arise they are often difficult and expensive to put right and in the interim they can cause untold problems and worries for the residents who are affected. Therefore, I welcome the opportunity that this debate offers to explore some of the reasons why these problems have arisen, what remedy is currently available and to assure the hon. Gentleman that the Government are aware of the problems faced by some householders and are already considering what action needs to be taken. I should perhaps add that, although the hon. Gentleman has highlighted problems in Wales and particular cases in his own constituency, such problems are common to both England and Wales.
I shall look at the commonest causes of non-adoption. Under section 20 of the Public Health Act 1936, as amended by the Water Act 1973, all sewers in public ownership at 1 April 1974 were deemed to be vested in the relevant water authority. Thus, there passed into the public ownership of the Welsh water authority over 12,000 km of sewers.
I am sure that the hon. Gentleman is well aware that even today, some 10 years after the setting up of the water authorities, one of the biggest causes of complaint by them is the inadequate plans and records of their sewers. The local authorities, which originally owned the sewers before the setting up of the water authorities, are the same authorities, or their successors, who today still act as agents of the water authority in the building, maintenance and management of the local sewer network. Thus, of the 2,700 or so properties identified by the hon. Gentleman in his constituency as being served by unadopted sewers, some may, in fact, be public sewers, but, because of inadequate documentation at the time, the water authority did not accept responsibility for them. I am told that many of them are indeed the property of Swansea city council.
I should add that the Welsh water authority has been very generous in its treatment of non-adopted sewers in this category, and in a letter to all its sewerage agency councils in 1980–81 it offered a final amnesty and to accept sewers into its ownership which were public sewers in 1974 but had been left off the sewer maps. I am sorry to say that the response from the district councils was very disappointing.
The second cause of non-adoption is that the water authorities will not accept the transfer of sewers into their ownership until the development to which they relate has been completed. This seems to me to be a very sensible approach by the water authorities, and has many precedents in other fields. Clearly, the water authority needs to be absolutely sure of what it is taking on and to have the opportunity of examining and testing the complete system before adoption. This can lead to problems for householders when a builder takes several years to complete a development. In the interim, problems arising related to the sewer are the responsibility of the developer, who may or may not be quick to remedy the situation or who may or may not be the same as the original developer who started the work. In all of that, the

consumers who are paying their charge to the water authority for sewerage services find it difficult to understand why the water authority, or its agents the district council, will not act to help them.
The third cause of non-adoption and the one which ultimately seems to cause most resentment is the sewer built by a developer which is put forward for adoption by the water authority under section 17 of the Public Health Act 1936 and is then found to be defective and not up to the standard required by the water auhority for adoption. The cause can be bad design; for example, the sewer is laid at the wrong depth below the road surface, or at the wrong gradient for it to be properly self-cleansing. Another problem often encountered is poor workmanship and materials. Even if the sewer conforms with building regulations, it may not conform with the standards required by the water authorities for adoption, which reflect wider considerations. I have to say that although I accept some of the points made by the hon. Gentleman on the difference in standard between building regulations and water authority adoption standards, many of the cases which have come to my right hon. Friend the Secretary of State for Wales show some failure, often on the part of the local authority, in inspecting and enforcing building regulations.
So much for the causes of non-adoption. Now let us look at the remedy. The drain and/or branch sewer serving an individual property is the responsibility of the individual house owner. However, the main sewer is normally in the ownership of the developer until adopted by the water authority. If problems do arise with that sewer, the first remedy for the individual is to seek action by or redress from the developer, and that quite often leads to a satisfactory outcome. Even after completion of a development, if the sewer remains undadopted, the remedy for the householder is still with the developer or his successor in title ultimately through the courts.
A common feature of cases that come to the attention of my right hon. Friends the Secretaries of State for Wales and for the Environment is where a developer has gone into liquidation and the residents themselves ask the water authority or its agents, the district council, to adopt a sewer. If the water authority refuses, there is a right of appeal to the Secretary of State under section 17(3) of the Public Health Act 1936.
That section of the Act lays down certain specific points to which my right hon. Friends should address themselves, as well as the facts of the individual case. I must stress that each case is different, usually presenting a combination of problems, causes and special factors, all of which have to be taken into account in reaching a decision on whether the sewers should or should not be adopted by the water authority. To assist my right hon. Friends in coming to a decision, they nearly always offer the parties the opportunity to state their case before an inspector, appointed for the purpose, at a private hearing or a public local inquiry. I am pleased to say that there have been quite a number of instances where, because of the circumstances of the individual case, my right hon. Friends have been able to find in favour of the residents and to have the sewers adopted.
The hon. Gentleman referred to the Maes Gerddi estate decision. A judicial review before the High Court on that section 17 case decision is pending, to which my right hon. Friend the Secretary of State for Wales is a party. I am sure the hon. Gentleman will understand that, for that reason,


I would not wish at this stage to get into a debate about the detailed application of section 17. He will realise that I must also be careful about how far I can discuss any individual cases that might ultimately find their way to my right hon. Friends for a decision on appeal under section 17(3) of the Public Health Act 1936.
As the hon. Gentleman said, there is a way open to developers which readily overcomes the problems about which we are talking today. That has been available since the Public Health Act 1936. Section 18 provides for a developer to enter into an agreement with the water authority that the sewers will be adopted upon completion, subject to their being built to the standards set down in that agreement. This provides a safeguard for both parties, in that the developer will be able to discharge his responsibility for ownership and maintenance of the sewer upon completion, and the water authority is assured that the sewer is built to a standard that will ensure its adoption. The residents also have the benefit of knowing that any problems that arise will be dealt with by the water authority.
The hon. Gentleman has been seeking assurances that the Government will take action to stop these problems arising in future. He has made several interesting suggestions, which I certainly promise to examine and consider with my right hon. Friends.
In case the hon. Gentleman is not aware of the situation, I should inform him that a working party composed of officials from Government Departments and the water authorities is currently examining the existing legislation relating to sewerage and sewage treatment and disposal, to see what changes are required to bring the legislation up to date and to remedy deficiencies. This follows on from the view of the Law Commissioners that the existing sewerage legislation is in need of consolidation. One of the areas of difficulty identified by the working party is the adoption of sewers. I shall certainly pass on the hon. Gentleman's ideas to that working party for its consideration.
The hon. Gentleman has pressed the case for a change in the law which requires developers to enter into a section

18 agreement with the water authority. This is certainly one option being examined by the legislative review group. The suggestion has the attraction from the residents' point of view that their sewers would be adopted. However, at that point one has to stop and examine exactly what is implied by such an agreement.
Certain obvious questions arise. First, how far does adoption go? Is it just the main sewer, the main sewer and branch sewers, or all sewers and drains to the curtilage of a property? There are a number of other possibilities as well. Secondly, the adoption standards are often more stringent than the building regulations, as the hon. Gentleman noted, because of the longer-term needs of water authorities, and thus they are more expensive to implement. This has an obvious consequence for any purchaser. Thirdly, with the sort of agreement envisaged by the hon. Gentleman, how far should the water authorities go in planning for possible extension of development to the site? The cost of such provision to the initial developer could be very high. All that I can do this evening is pose the questions. I shall certainly not try to answer them.
The present system of voluntary section 18 agreements works well and enables the developer to agree the extent of adoption and ensure the best balance of cost and service to the purchaser of property on the site being developed. Thus, though there are initial obvious attractions to the hon. Gentleman's proposition, all aspects must be carefully considered. The views that he expressed are helpful in this consideration. I assure him that they will be given further attention.
This debate has been most constructive. I hope that the elucidation and assurances that I have been able to give to the hon. Member have helped to assure him that the Government are very much alive to the problems faced, thankfully, by a very small minority of the population. Nevertheless, they are important. I am also glad to confirm to him that the Government are actively examining what action needs to be taken both to stop these problems occurring in future and to deal with existing problems.

Question put and agreed to.

Adjourned accordingly at twenty-two minutes past Eight o' clock.